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Singapore Exchange

July 2015June 2016


Annual Report 2016 01

Corporate
Information

Board of Directors Board Committees Registered Office


Chairman Audit Committee Singapore Exchange Limited
Mr Chew Choon Seng Chairman 2 Shenton Way
Mr Kevin Kwok #02-02 SGX Centre 1
Lead Independent Director Singapore 068804
Mr Kwa Chong Seng Members t +65 6236 8888
Ms Jane Diplock AO f +65 6535 6994
Chief Executive Officer Mr Lee Hsien Yang w www.sgx.com
Mr Loh Boon Chye Mr Liew Mun Leong

Members Nominating & Place of Incorporation


Mr Thaddeus Beczak Governance Committee Singapore
Ms Chew Gek Khim Chairman
Ms Jane Diplock AO Mr Kwa Chong Seng
Mr Kevin Kwok Company Registration No.
Mr Lee Hsien Yang Members 199904940D
Mr Liew Mun Leong Mr Chew Choon Seng
Ms Lim Sok Hui (Mrs Chng Sok Hui) Ms Chew Gek Khim
Appointed on 1 December 2015 Mr Liew Mun Leong Date of Incorporation
Mr Ng Kok Song Mr Ng Kok Song 21 August 1999

Regulatory Conflicts Committee


Company Secretary Investor Relations
Chairman e ir@sgx.com
Ms Ding Hui Yun
Ms Jane Diplock AO

Members Sustainability
Mr Thaddeus Beczak e sustainability@sgx.com
Mr Chew Choon Seng
Mr Kevin Kwok
Share Registrar
Boardroom Corporate &
Remuneration &
Advisory Services Pte. Ltd.
Staff Development Committee
50 Raffles Place
Chairman
#32-01 Singapore Land Tower
Mr Kwa Chong Seng
Singapore 048623
Members t +65 6536 5355
Mr Chew Choon Seng f +65 6438 8710
Mr Liew Mun Leong e SRS.TeamB@boardroomlimited.com
Mr Ng Kok Song w www.boardroomlimited.com

Risk Management Committee


Chairman Auditor
Ms Chew Gek Khim PricewaterhouseCoopers LLP
Appointed on 6 October 2015 8 Cross Street #17-00
PWC Building
Members Singapore 048424
Mr Thaddeus Beczak t +65 6236 3388
Ms Jane Diplock AO f +65 6236 3300
Mr Kevin Kwok w www.pwc.com/sg
Ms Lim Sok Hui (Mrs Chng Sok Hui)
Appointed on 1 December 2015
Partner-in-Charge
Ms Deborah Tan Yang Sock
(Mrs Deborah Ong)
Appointed on 1 July 2014
Asias Global Connect directly to 80% of Asias equity markets and its most
international listing and bond trading platform, the regions
Exchange premier risk management venue and the worlds most liquid
offshore pan-Asian derivatives market.

At SGX, you are at the epicentre of the worlds best business


environment where benchmarks are set for the regulation of
Singapores capital market and with a name trusted around the
world for reliability, efficiency and connectivity.

Letter from the


Chairman and the Ceo
FY2016 was a year of key changes for
Singapore Exchange (SGX) as we focused on
building a sustainable business.

For more information on Letter from the


Chairman and the CEO,
go to: pages 811

Financial Issuer Services Revenue


FY2016 Revenue Highlights & $82.6M
Performance Securities Trading and
Review Clearing Revenue

The most important


$205.0M
indicators of financial Post Trade
Services Revenue

$118.2M
Total
performance show
Revenue how our ability to deploy
$818M our capital across our
Equities and Derivatives Revenue

$325.3M
Fixed Income businesses produces
Derivatives sustainable value for
Market Data shareholders.
and Connectivity Market Data and
Connectivity Revenue

For more information on


$87.0M
Business at a Glance, For more information on Financial Highlights &
go to: page 4 Performance Review, go to: pages 67

Sustainability

Identify Prioritise Validate


Our Sustainability Committee The relevance and significance Management, together
identified potential ESG risks and of each ESG factor to SGX's with the Sustainability
opportunities through stakeholder business were assessed. Issues of Committee, approved the
engagement and internal reviews. similar characteristics were material ESG factors.
clustered together for a more
accurate picture.

For more information on Sustainability,


go to: pages 3444
Annual Report 2016 03

Contents Performance Overview

Performance Overview
Business at a Glance 4
Financial Performance Summary 5
Financial Highlights & Performance Review 6

Group Overview

Group Overview
Letter from the Chairman and the CEO 8
Board of Directors 12
Executive Management Committee 18
Organisation 22

Value Creation & Sustainability

Value Creation & Sustainability


Value Creation 24
Material Factors 26
Priorities 28
Risk Management 30
Sustainability 34

Governance

Governance
Corporate Governance Report 45
Self-Regulatory Organisation Governance Report 64
Report of Independent Committees 69
Remuneration Report 73

Financials
Directors Statement 78 Financials
Independent Auditors Report 88
Statements of Comprehensive Income 93
Statements of Financial Position 94
Statements of Changes in Equity 95
Statement of Cash Flows 98
Notes to the Financial Statements 99

Others
Others

Statistics of Shareholdings 153


Notice of Annual General Meeting 154

Online Annual Report


http://investorrelations.sgx.com/annuals.cfm
04 Singapore Exchange

Business
at a Glance

4%
5% Corporate
Market data actions and other

6% 6%
Connectivity Listing
1%
Collateral
management,
membership and other

5%
10% Access
Issuer
Services
19%
10% Clearing
Collateral

11%
management,
licence,
membership
and other
25%
30% Securities
Trading and
49%
Equity and
Commodities Clearing

40%

14% 1%
Equities and Post Trade Depository
Services management
Fixed Income
2%
Contract processing
Derivatives
11%
Market Data Securities settlement
and Connectivity

Revenue

$ 818M
Total revenue up 5% from $779 million

Operating Profit Net Profit Earnings per Share

$409M $349M 32.6


2% from $402M Unchanged Unchanged

Dividend per Share Return on Equity

28
Unchanged,
36%
1% pt from 37%
including proposed final
dividend of 13 per share

All comparatives are for the year earlier.


Financial Performance Summary Annual Report 2016 05

Financial

Performance Overview
Performance
Summary

($million) FY2012 FY2013 FY2014 FY2015 FY2016

Group Overview
Statement of Income
Revenue 647 714 686 779 818
Expenses 284 301 315 377 409
Operating profit 363 413 371 402 409
Profit before tax and share of results of
joint venture and associated companies 358 404 377 410 415
Net profit attributable to equity holders 292 336 320 349 349
Statement of Cash Flows

Value Creation & Sustainability


Cash flows from operating activities 345 419 359 429 423
Statement of Financial Position
Total assets 1,729 1,795 1,641 1,801 2,105
Unrestricted cash and cash equivalents 548 613 607 633 598
Committed for derivatives clearing fund 150 150 150 150 200
Committed for securities clearing fund 35 60 60 60 60
Committed for National Electricity
Market of Singapore Nil Nil Nil 7 8

Governance
Total liabilities 896 906 719 825 1,115
Total equity 833 889 922 976 990
Includes proposed final dividend of 160 171 171 171 139
Capital expenditure 41 32 83 76 75
No. of shares issued (million) 1,072 1,072 1,072 1,072 1,072
No. of shares held as treasury shares (million) 4 2 2 1 2
Financial Indicators
Revenue growth (%) (1.9) 10.4 (4.0) 13.5 5.1
Operating profit margin (%) 56.1 57.9 54.1 51.6 50.0 Financials
Cost-to-income ratio (%) 43.9 42.1 45.9 48.4 50.0
Net gearing Nil Nil Nil Nil Nil
Operating cash flow per share (cents) 32.3 39.2 33.5 40.1 39.6
Net asset value per ordinary share as at
30 June (cents) 78.0 83.1 86.2 91.2 92.5

Based on net profit attributable to equity holders


Others

Net profit margin (%) 45.4 47.6 46.3 44.3 42.4


Return on equity (%) 35.2 39.0 35.4 36.7 35.5
Dividend payout ratio (%) 98.8 89.1 93.4 86.0 85.9
Basic earnings per share (cents) 27.3 31.4 30.0 32.6 32.6
06 Singapore Exchange

Financial SGX recorded net profit of $349.0 million, unchanged from a year
earlier. Net profit included an impairment charge of $6.0 million
Highlights & on our investment in the Bombay Stock Exchange. Revenue
Performance increased $39.6 million or 5% to $818.1 million.
Review

Equities and Fixed Income


Issuer Services Securities Trading and Clearing
Revenue is generated from the listing Revenue is generated from the trading
of equities and debt instruments, as and clearing of stocks, exchange-traded
well as fees from corporate actions and funds (ETFs), and structured warrants
issuer services. listed on the SGX Securities exchange.

Contribution to Contribution to
total revenue: total revenue:

10% 25%
Total Income Revenue Revenue

$82.6M $205.0M
Contribution

-6% from $87.6M -2% from $209.3M

Sub-Segment
Securities
Clearing 78%
Listing 57%
Access 18%
FY2016 Corporate
actions
FY2016 Collateral
and other 43% management,
membership
and other 4%

Performance Listing Corporate Securities Access Collateral


Highlights revenue: actions and Clearing revenue: management,
other revenue: revenue: membership
and other
revenue:
$46.7M $35.9M $158.5M $37.6M $8.9M
-10% from $51.6M unchanged -3% from unchanged +10% from
$163.5M $8.1M

Listing revenue decreased 10%, Securities daily average traded value


primarily due to a decline in the (SDAV) and total traded value were
number of bond listings. There were both largely unchanged at $1.10 billion
349 bond listings raising $172.0 billion, ($1.09 billion) and $274.1 billion
compared to 487 listings raising ($274.3 billion) respectively. There
$184.8 billion a year earlier. There were 250 (251) trading days this year.
were a total of 21 new equity and
trust listings which raised $2.1 billion, Average clearing fee was 2.9 basis
compared to 34 new listings raising points, down 3% from 3.0 basis
$2.7 billion a year earlier. Secondary points a year earlier, due to increased
equity funds raised were $5.1 billion participation of market makers and
($8.8 billion). Total market liquidity providers. Turnover velocity
capitalisation was $898.7 billion for the year was 41% (36%).
as of 30 June 2016, down 11%
from a year earlier ($1.0 trillion).

All comparatives and figures in brackets are for the year


earlier, unless otherwise stated.
Financial Highlights & Performance Review Annual Report 2016 07

Performance Overview
Derivatives Market Data and Connectivity

Group Overview
Revenue is generated from the Revenue is generated from the offering
Post Trade Services
trading and clearing of futures, swaps of connectivity solutions to market
Revenue is generated from settled and options contracts covering a participants, distribution of market data
trades transacted on the SGX stock broad selection of Asian economies, as well as the creation, management and
market, as well as the transfers of commodities and currencies. We also licensing of indices.
securities that take place independently provide clearing services for over-
of the trading on the exchange. the-counter (OTC) trading of selected
commodities and financial derivatives.

Value Creation & Sustainability


Contribution to Contribution to Contribution to
total revenue: total revenue: total revenue:

14% 40% 11%


Revenue Revenue Revenue

$118.2M $325.3M $87.0M


+13% from $104.7M +10% from $295.8M +7% from $81.2M

Governance
Securities Equity and
settlement 79% Commodities 74%
Contract Collateral Market data 44%
FY2016 processing 14% FY2016 management, FY2016 Connectivity 56%
licence,
Depository membership
management 7% and other 26%

Securities Contract Depository Equity and Collateral Market data Connectivity


settlement processing management Commodities management, revenue: revenue:
revenue: revenue: revenue: revenue: licence, membership
and other revenue:

$93.8M $15.9M $8.5M $241.4M $83.9M $38.3M $48.7M

Financials
+15% from unchanged +14% from +8% from $224.2M +17% from $71.6M +5% from $36.6M +9% from $44.6M
$81.3M $7.4M

Securities settlement revenue Equity and Commodities revenue Market data revenue grew 5% due to
increased 15%, following changes grew $17.2 million or 8%, as increased increased revenue from derivatives
in the mix of securities settlement volumes were partially offset by lower market data feed and index services.
instructions. average fee per contract. Total volumes
increased 14% to 183.1 million contracts Connectivity revenue increased 9%,
Depository management revenue was (161.2 million contracts), primarily primarily due to the continued growth
up 14%, following an increase in the from higher volumes in the SGX FTSE of our colocation business.
number of new accounts opened by China A50 Index futures and Iron Ore
Depository Agents. contracts. Average fee per contract was
Others

lower at $1.19 ($1.28), primarily due to


revision in pricing and incentives for
Iron Ore contracts as a result of
increased competition.

Average month-end open interest


for equities and commodities derivatives
was 3.7 million contracts, up 12% from
3.3 million contracts a year earlier.
08 Singapore Exchange

Letter from the Our Results

Chairman and the CEO Net Profit

$349.0M
unchanged from FY2015

Total Revenue

$818.1M
+5% from FY2015

From left:
Mr Chew Choon Seng
Chairman
Mr Loh Boon Chye
Chief Executive Officer
Letter from the Chairman and the CEO Annual Report 2016 09

Ensuring SGXs Sustainability Securities Trading and Clearing to increase

Performance Overview
the overall Equities and Fixed Income revenue
FY2016 was a year of key changes for by 1% year-on-year.
Singapore Exchange (SGX) as we focused on
building a sustainable business. Market Data and Connectivity revenue rose
$5.9 million to $87.0 million, accounting for
Senior leadership changes were made, and 11% of total revenue. This was attributable to
a reorganisation in December 2015 ensued to stronger demand for data on derivatives and
align with our priorities to improve liquidity growth of our colocation business.
in our securities market, diversify our business
mix and maintain cost discipline in the face Growth of expenses outpaced revenue growth

Group Overview
of difficult market conditions. with higher expenditure on technology, staff
and royalties. Whilst conscious of the need for
discipline on spending, we will invest where
Financial Highlights necessary for growth of the business and
development of the organisation, and to
SGX recorded overall revenue of $818.1 million enhance SGXs capabilities.
for FY2016, up 5% from a year earlier, while
expenses increased 9% to $409.0 million.
We turned in a net profit of $349.0 million, Building Asias Global
unchanged from last year. Multi-Asset Exchange

Value Creation & Sustainability


Revenue growth was primarily driven by With the evolution of Asias capital markets,
our Derivatives business. Derivatives revenue SGXs competitiveness as a leading multi-asset
increased $29.5 million to $325.3 million, exchange is being strengthened by a growing
accounting for 40% of total revenue. This suite of products and services.
was achieved through a 14% increase in total
volumes, primarily in the Iron Ore contracts The introduction of SGX Bond Pro, an
and SGX FTSE China A50 Index futures. over-the-counter trading venue dedicated
Liquidity continued to improve, with average to Asian bonds, reinforced our position as
month-end open interest of 3.7 million a regional bond hub. Furthermore, with

Governance
contracts, up 12% from a year earlier. the establishment of the Bond Seasoning
Framework, retail investors will have access to
Equities and Fixed Income revenue, bonds and a wider spectrum of fixed income
comprising Issuer Services, Securities products that were hitherto available only to
Trading and Clearing, and Post Trade accredited investors.
Services, remained the largest contributor
to total revenue at 49%, and grew $4 million As we diversify our business mix,
to $405.8 million. IPO activity was subdued we founded our new Index
and fund-raising in both bond and equity business, SGX Index Edge, to Revenue growth was
markets declined year-on-year, as meet the demand for index-linked primarily driven by our
uncertainties in the global economy investments in Asia by issuers
slowed capital-raising activity. There were and investors. Following the
Derivatives business. Derivatives Financials
349 bond listings raising $172.0 billion and launch of SGX Thematic Indices in revenue increased $29.5 million
21 equity and trust listings raising $2.1 billion, late 2015, we rolled out SGX to $325.3 million, accounting for
compared to 487 bond listings raising Sustainability Indices in May 40% of total revenue. This was
$184.8 billion and 34 equity and trust listings 2016. This complements the achieved through a 14% increase
raising $2.7 billion a year earlier. We were addition of Sustainability in total volumes, primarily in the
not spared from the worldwide dearth Reporting to the listing
Iron Ore contracts and SGX FTSE
of IPOs as there were only 3 Mainboard requirements.
IPOs out of the 21 equity and trust listings China A50 Index futures.
in FY2016. While securities daily average We continued to innovate in
Others

traded value (SDAV) was unchanged at Asian derivatives, with new products such as
$1.1 billion, increased participation from market SGX MSCI China Index contracts, the worlds
makers and liquidity providers decreased the first offshore Indian sector futures, iron ore
average clearing fee by 3% to 2.9 basis points. lump premium contracts and the SGX LNG
In contrast, changes in the mix of settlement Index Group (Sling) futures.
instructions and new Depository Agent
accounts resulted in additional $13.6 million SGX was recognised for its development of
revenue from a year earlier. This made up for new products in commodity derivatives and
the lower revenues from Issuer Services and energy risk management. We were named
10 Singapore Exchange

Letter from the


Chairman and the CEO

Exchange of the Year at the global 170,000 participants attended our improvement. These findings will
Energy Risk Awards 2016, becoming the investor courses and events, and we help us in our work with the companies
first Asian exchange to win this accolade. ended the year with a total of 921,000 to do better.
CDP accounts with holdings, a 5%
Our freight derivatives business saw increase from a year ago. Our enforcement powers were
volumes increasing five-fold to almost enhanced with the new Listings
half a million contracts and SGX dry Advisory, Disciplinary and Appeals
bulk freight open interest grew Enhancing Trust in Committees. We issued 7 public
correspondingly. This year we also Our Marketplace reprimands to listed companies and their
celebrated 30 years of the SGX Nikkei relevant persons for rule breaches and
225 Index futures contract and the 10th We concentrated our regulatory efforts referred 32 market misconduct cases to
anniversary of both the SGX FTSE China during the year on the prevention of the Monetary Authority of Singapore.
A50 Index futures contract and SGX wrong-doing, enforcement of our rules We extended the privy list that
AsiaClear as an OTC clearing house. and clearer communication of our companies maintain to all material
expectations. These efforts were led by information so as to deter insider trading.
In the area of capital-raising, alternatives, Mr Tan Boon Gin, our Chief Regulatory We also published 7 Regulators Columns
such as private equity, for companies and Officer who was appointed in June 2015. to set out, for example, our expectations
issuers have grown worldwide. To of companies facing short-seller attacks
compete effectively and address the Given that how SGX regulates companies or sudden adverse financial changes.
decrease in the number of listings, we has great bearing on investors trust, the
have reinforced our listings proposition industry and SGX are together stepping
to broaden beyond Singapores up to improve on this front. Reputable Looking Ahead
established sector strengths in REITs and industry professionals make up our
business trusts, to promote fast growing independent Listings Advisory At the time of this writing, we have
industries such as Healthcare and Committee, which considers certain announced a specific offer to acquire the
Technology. listing applications that are novel or of London-headquartered Baltic Exchange.
public interest. The Association of Banks Notwithstanding Britains pending exit
Engagement with stakeholders is always in Singapore enhanced its Listings Due from the European Union, we believe this
a priority for SGX. We reached out to Diligence Guidelines with input from the potential acquisition will bring synergies
over 60 institutional investment firms industry and SGX. from the worlds two most important
and fund managers during the course maritime business hubs and further
of the year and trained in excess of 1,300 Following the introduction of a minimum international commodity trade.
trading representatives. More than trading price of S$0.20 for shares of
Mainboard companies and taking market Subsequent to the financial year ended
feedback into consideration, we 30 June 2016, SGX experienced a
enhanced the calculation methodology technology-related service disruption to
Given that how SGX and gave companies affected by market the securities market on 14 July 2016.
regulates companies has volatility an extension of time to comply SGX takes this incident seriously. We
great bearing on investors with our minimum trading price rules. have identified the root causes and are
Our Trade with Caution alerts are now taking corrective actions accordingly.
trust, the industry and more specific on information that will be
SGX are together stepping meaningful and useful to investors. We In the coming year, we will work on
up to improve on this published a new Report on Long- establishing a subsidiary company with
front. Reputable industry Suspended Companies to highlight its own Board of Directors, separate
professionals make up efforts in helping companies resume from and independent of SGXs Board,
our independent Listings share trading, or to obtain an exit offer with the objective of making more
for shareholders. Our inaugural Review explicit the segregation of regulatory
Advisory Committee, which of Mainboard Companies Code of functions from commercial and operating
considers certain listing Corporate Governance Disclosures rated activities. We will continue to do all we
applications that are novel the disclosures by listed companies as can within the SRO framework to
or of public interest. good overall but with room for address potential conflicts between
Letter from the Chairman and the CEO Annual Report 2016 11

Performance Overview
commercial objectives and regulatory Chairman from 2007 to 2013.

Group Overview
responsibilities. SGX has gained from his conscientious
stewardship, insightful ideas and
Message from
Economic and political uncertainties guidance. We thank Mr Lee for his the Chairman
have brought about volatile market valuable contribution and wish him
conditions that now seem to be the the best.
new normal. While we keep an eye on At the coming AGM, I will retire
the opportunities and challenges that under Article 99, and will not be
this volatility brings, we will stay the Acknowledgments standing for re-election.
course in executing our strategy and
delivering returns. We thank our clients, members, I have been on the Board for

Value Creation & Sustainability


shareholders, business associates and all very nearly twelve years, and as
SGX staff, as well as our fellow directors, Chairman for the second half of
Dividend for the support we have received, and that time. With Mr Loh Boon Chye
look forward to your continuing and Mr Tan Boon Gin well settled
The Board is recommending a final confidence in SGX. in their respective roles as
dividend for FY2016 of 13 cents per Chief Executive Officer and
share. Together with the interim Chief Regulatory Officer, this is
dividends of 5 cents per share paid for an appropriate juncture for me to
each of the first three quarters, this will step down and hand over the helm.
maintain the total dividend for the year
Chew Choon Seng

Governance
at 28 cents per share. The Directors have elected
Chairman Mr Kwa Chong Seng to be your
The Board considersthis appropriate, new Chairman. He has been on the
given that profits are at the same level as Board since 2012 and is the Lead
in the preceding year, and the economic Loh Boon Chye Independent Director as well as
uncertainties ahead. Chief Executive Officer Chairman of both the Nominating
& Governance Committee and
the Remuneration & Staff
Board Renewal Development Committee.
Mr Kwa's capabilities, experience
We welcomed Mrs Chng Sok Hui to the and accomplishments in industry,
Board last December. She is the Chief business and public service are Financials
Financial Officer of Singapores largest well known and highly regarded.
bank, a position she has held since 2008, SGX will definitely be well steered.
and brings expertise and experience that
are relevant and beneficial to SGX. She The exchange is an important and
will be standing for election at the sensitive component of Singapore's
coming AGM. financial system. It has been an
honour to be of service and I am
On the other hand, we will be bidding thankful for the support and
farewell to Mr Lee Hsien Yang, who is cooperation of my fellow Board
Others

retiring under Article 99 at the same members and all the people, inside
AGM and will not be standing for and outside the organisation,
re-election. Mr Lee was elected to the whom I have worked with. I trust
Board in 2004, and in his twelve years as that Mr Kwa will enjoy the same.
a Director he has served at various times
as a member of the Nominating
Committee and the Remuneration Chew Choon Seng
Committee, as well as the Audit
Committee, of which he was the
12 Singapore Exchange

Board
of Directors

Mr Chew Choon Seng Mr Loh Boon Chye


Chairman Chief Executive Officer
Non-Executive and Executive and
Non-Independent Director Non-Independent
Director

Date of first appointment as a director Date of first appointment as a director


1 December 2004 20 July 2015
Date of appointment as Chairman Date of last re-election as a director
1 January 2011 23 September 2015
Date of last re-election as a director Length of service as a director (as at 30 June 2016)
19 September 2013 11 months
Length of service as a director (as at 30 June 2016) SGX Board Committee Membership
11 years 7 months Nil
SGX Board Committee Membership Academic & Professional Qualification
Nominating & Governance Committee (Member) Bachelor of Engineering (Mechanical),
Regulatory Conflicts Committee (Member) National University of Singapore
Remuneration & Staff Development Committee (Member)
Present Directorship other than SGX (as at 30 June 2016)
Academic & Professional Qualification Listed company
Bachelor of Engineering (Mechanical) (First Class Honours), Nil
University of Singapore
Master of Science in Operations Research and Management Others (Non-Listed company)
Studies, Imperial College of Science and Technology, BC Capital Ltd
University of London BC Capital Properties, LLP
Present Directorship other than SGX (as at 30 June 2016) GIC Private Limited
Listed company Gym & Sports Pte. Ltd.
Nil SGX Bond Trading Pte. Ltd.
Singapore Exchange Derivatives Clearing Limited
Others (Non-Listed company) Singapore Exchange Derivatives Trading Limited
GIC Private Limited Singapore Exchange Securities Trading Limited
National Gallery Singapore The Central Depository (Pte) Limited
Singapore Tourism Board (Chairman)
Major Appointment (other than Directorship)
Major Appointment (other than Directorship) MAS Securities Industry Council (Member)
Nil The Institute of Banking and Finance (Council Member)
MAS Financial Centre Advisory Panel (Member)
Past Directorship other than SGX held over the preceding Singapore Business Federation Council (Member &
three years (from 30 June 2013 to 29 June 2016) Honorary Secretary)
Nil Singapore Business Federation Appointments and
Remuneration Committee (Member)
Singapore Business Federation Nomination Committee
(Member)
Sub-Committee on the Future of Connectivity of the
Committee on the Future Economy (Member)

Past Directorship other than SGX held over the preceding


three years (from 30 June 2013 to 29 June 2016)
Nil
Board of Directors Annual Report 2016 13

Performance Overview
Mr Thaddeus Beczak Ms Chew Gek Khim

Group Overview
Non-Executive and Non-Executive and
Independent Director Independent Director

Date of first appointment as a director Date of first appointment as a director

Value Creation & Sustainability


7 October 2010 1 December 2013
Date of last re-election as a director Date of next re-election as a director
23 September 2015 22 September 2016
Length of service as a director (as at 30 June 2016) Length of service as a director (as at 30 June 2016)
5 years 9 months 2 years 7 months

SGX Board Committee Membership SGX Board Committee Membership


Regulatory Conflicts Committee (Member) Risk Management Committee (Chairman)1
Risk Management Committee (Member) Nominating & Governance Committee (Member)

Academic & Professional Qualification Academic & Professional Qualification


Bachelor of Science (Foreign Service International Affairs), LL.B (Honours), National University of Singapore
Georgetown University
Master of Business Administration, Columbia University Present Directorship other than SGX (as at 30 June 2016)
Listed company

Governance
Present Directorship other than SGX (as at 30 June 2016) ARA Asset Management Limited
Listed company (Non-Executive Deputy Chairman)
Pacific Online Limited ARA Trust Management (Suntec) Limited
Phoenix Satellite Television Holdings Limited (Non-Executive Chairman)
China Minsheng Financial Holding Corporation Limited Malaysia Smelting Corporation Berhad (Non-Independent and
Non-Executive Chairman)
Others (Non-Listed company) The Straits Trading Company Limited (Executive Chairman)
Arnhold (B.V.I.) Limited
Chumleigh Limited1 Others (Non-Listed company)
Derbyshire Limited Cairnhill Rock Pte. Ltd.
Goldic Limited1 Morriston Pte. Ltd
Jade China International Limited1 Nexford Holdings Pte. Ltd.
Old Peak Investments Limited Straits Real Estate Pte. Ltd.
Value Scale Investments Limited1 Tan Chin Tuan Pte. Ltd2 (Deputy Executive Chairman)
White Tiger Group Limited1 Tecity Pte Ltd3 (Executive Chairman)

Major Appointment (other than Directorship) Major Appointment (other than Directorship) Financials
Georgetown University School of Foreign Service (Board of Advisors) RSIS Board of Governors (Member)
Hong Kong University of Science and Technology (Adjunct Securities Industry Council (Member)
Professor, MBA degree programme) SSO Council (Member)
Huaxing Capital Partners (Investment Committee Member) The Tan Chin Tuan Foundation (Deputy Executive Chairman)
International Advisory Committee of the China Securities The Tan Sri Tan Foundation (Chairman)
Regulatory Commission (Member)
Past Directorship other than SGX held over the preceding
Past Directorship other than SGX held over the preceding three years (from 30 June 2013 to 29 June 2016)
three years (from 30 June 2013 to 29 June 2016) CapitalRetail China Trust Management Limited
ACR Capital Holdings Pte Limited (Non-Executive Chairman) Singapore Totalisator Board
Advanced Semiconductor Manufacturing Corp Limited Swiftflash Assets Limited
Arnhold Holdings Limited
Artisan Du Luxe Holding Limited (Non-Executive Chairman)
Others

China Renaissance Holdings Limited (Vice Chairman)


China Renaissance Securities (Hong Kong) Limited (Chairman)
Cowen and Company (Asia) Limited (Chairman) 1 Appointed on 6 October 2015
2 Including its subsidiaries & associate, namely Consultants Services
Cowen and Company, LLC (Vice-Chairman)
e-Kong Group Limited (Private) Limited, Tecity Management Pte. Ltd. (Executive Chairman),
Grange Investments Holdings Private Limited, Kambau Pte. Ltd.
(Executive Chairman), Tiong Cheng Pte Ltd (Deputy Executive
Chairman), Amalgamated Holdings Private Limited, Amberlight
Limited, Siong Lim Private Limited, Choice Equities Pte Ltd,
Integrated Holdings Private Limited (Executive Chairman) .
3 Including its subsidiaries & associates, namely Ho Peng Holdings
Private Limited, Selected Holdings Private Limited, Mellford Pte. Ltd.,
Aequitas Pte. Ltd., Raffles Investments Limited, Raffles Investments
1 Personal family related investment holding companies held by (1993) Pte Ltd, Sigford Pte. Ltd., The Cairns Pte. Ltd., and Selected
Mr Beczaks wife. Properties Pte. Ltd.
14 Singapore Exchange

Board of
Directors

Ms Jane Diplock AO Mr Kwa Chong Seng


Non-Executive and Lead Independent Director
Independent Director Non-Executive and
Independent Director

Date of first appointment as a director Date of first appointment as a director


25 July 2011 20 September 2012
Date of next re-election as a director Date of last re-election as a director
22 September 2016 25 September 2014
Length of service as a director (as at 30 June 2016) Length of service as a director (as at 30 June 2016)
4 years 11 months 3 years 9 months

SGX Board Committee Membership SGX Board Committee Membership


Regulatory Conflicts Committee (Chairman) Nominating & Governance Committee (Chairman)
Audit Committee (Member) Remuneration & Staff Development Committee (Chairman)
Risk Management Committee (Member)
Academic & Professional Qualification
Academic & Professional Qualification Bachelor of Engineering (Mechanical),
Bachelor of Arts (Honours), LL.B, Dip. Ed., Sydney University National University of Singapore
Dip. Int. Law, Australian National University
Chartered Fellow of the New Zealand Institute of Directors Present Directorship other than SGX (as at 30 June 2016)
Listed company
Present Directorship other than SGX (as at 30 June 2016) Neptune Orient Lines Limited1
Listed company Olam International Limited (Chairman)
Nil Singapore Technologies Engineering Ltd (Chairman)

Others (Non-Listed company) Others (Non-Listed company)


Australian Financial Services Group Pty Limited Delta Topco Limited
International Integrated Reporting Council Board (Deputy Seatown Holdings Pte Ltd
Chairman & Lead Independent Director)
Major Appointment (other than Directorship)
Major Appointment (other than Directorship) Advisory Committee of Dymon Asia Capital Ltd (Chairman)
Abu Dhabi Global Market Regulatory Committee (Chairman) Public Service Commission (Deputy Chairman)
International Advisory Board of the Securities and Exchange
Board of India (Member) Past Directorship other than SGX held over the preceding
International Advisory Committee of the China Securities three years (from 30 June 2013 to 29 June 2016)
Regulatory Commission (Member) APL Logistics Ltd (Chairman)
Public Interest Oversight Board (Member) Fullerton Fund Management Company Ltd. (Chairman)
Singapore Technologies Holdings Pte Ltd
Past Directorship other than SGX held over the preceding
three years (from 30 June 2013 to 29 June 2016)
Nil

1 Including its subsidiaries, namely APL (Bermuda) Ltd (Chairman),


APL Co. Pte Ltd (Chairman), APL Limited (Chairman), Automar
(Bermuda) Ltd. (Chairman) and NOL Liner (Pte.) Ltd. (Chairman)
Board of Directors Annual Report 2016 15

Performance Overview
Mr Kevin Kwok Mr Lee Hsien Yang

Group Overview
Non-Executive and Non-Executive and
Independent Director Non-Independent
Director

Date of first appointment as a director Date of first appointment as a director

Value Creation & Sustainability


20 September 2012 17 September 2004
Date of last re-election as a director Date of last re-election as a director
23 September 2015 25 September 2014
Length of service as a director (as at 30 June 2016) Length of service as a director (as at 30 June 2016)
3 years 9 months 11 years 9 months

SGX Board Committee Membership SGX Board Committee Membership


Audit Committee (Chairman) Audit Committee (Member)
Regulatory Conflicts Committee (Member) Academic & Professional Qualification
Risk Management Committee (Member) Bachelor of Arts (Double First), Cambridge University
Academic & Professional Qualification Master of Science Management, Stanford University
Bachelor of Arts (Honours), University of Sheffield Present Directorship other than SGX (as at 30 June 2016)
ACA Associate, Institute of Chartered Accountants in England Listed company
& Wales Australia and New Zealand Banking Group Limited

Governance
FCA Fellow, Institute of Singapore Chartered Accountants Rolls-Royce Holdings PLC
FSID Fellow, Singapore Institute of Directors
Others (Non-Listed company)
Present Directorship other than SGX (as at 30 June 2016) 38 Oxley Road Pte Ltd
Listed company Caldecott Inc.
Mapletree Greater China Commercial Trust Management Ltd Civil Aviation Authority of Singapore (Chairman)
Wheelock Properties (Singapore) Limited Cluny Lodge Pte Ltd
General Atlantic Singapore Fund FII Pte. Ltd.
Others (Non-Listed company) General Atlantic Singapore Fund Pte. Ltd. (Chairman)
Keppel Offshore & Marine Ltd Governing Board of Lee Kuan Yew School of Public Policy
Singapore Institute of Directors The Islamic Bank of Asia Limited (Chairman)
GA Robusta F&B Company Pte. Ltd.
Major Appointment (other than Directorship) GA Robusta F&B Holding Pte. Ltd.
Accounting Standards Council (Chairman)
Singapore Institute of Directors (Governing Council Member) Major Appointment (other than Directorship)

Financials
Capital International Inc. Advisory Board (Consultant)
Past Directorship other than SGX held over the preceding General Atlantic (Special Advisor)
three years (from 30 June 2013 to 29 June 2016) INSEAD South East Asia Council (President)
NTUC ElderCare Co-Operative Limited Lee Kuan Yew School of Public Policy (Member,
NTUC Income Insurance Co-Operative Limited Board of Governors)
Past Directorship other than SGX held over the preceding
three years (from 30 June 2013 to 29 June 2016)
Nil
Others
16 Singapore Exchange

Board of
Directors

Mr Liew Mun Leong Ms Lim Sok Hui


Non-Executive and (Mrs Chng Sok Hui)
Independent Director Non-Executive and
Non-Independent
Director

Date of first appointment as a director Date of first appointment as a director


1 July 2009 1 December 2015
Date of last re-election as a director Date of next re-election as a director
23 September 2015 22 September 2016
Length of service as a director (as at 30 June 2016) Length of service as a director (as at 30 June 2016)
7 years 7 months
SGX Board Committee Membership SGX Board Committee Membership
Audit Committee (Member) Risk Management Committee (Member)1
Nominating & Governance Committee (Member)
Remuneration & Staff Development Committee (Member) Academic & Professional Qualification
Bachelor of Accountancy (Honours),
Academic & Professional Qualification
National University of Singapore
Bachelor of Engineering (Civil), University of Singapore
Chartered Financial Analyst (CFA)
Registered Professional Engineer
Certified Financial Risk Manager (FRM)
Present Directorship other than SGX (as at 30 June 2016) Fellow Chartered Accountant of Singapore
Listed company IBF Distinguished Fellow
Nil
Present Directorship other than SGX (as at 30 June 2016)
Others (Non-Listed company) Listed company
Changi Airport Group (Singapore) Pte Ltd (Chairman) Nil
China Club Investment Pte Ltd (Chairman)
Dymon Asia Real Estate Limited (Chairman) Others (Non-Listed company)
Human Capital Leadership Institute Inland Revenue Authority of Singapore
Lotus Mentoring Leadership Pte. Ltd
Singapore-China Foundation Ltd Major Appointment (other than Directorship)
Surbana Jurong Private Limited DBS Bank Ltd (Chief Financial Officer)
Temasek Foundation Nurtures CLG Limited (Chairman) DBS China Ltd (Supervisor)
International Integrated Reporting Council (Member)
Major Appointment (other than Directorship) Industry Advisory Board, NUS Centre for Future-Ready
Chinese Development Assistance Council Graduates (Member)
(Member, Board of Trustees) International Womens Forum (Singapore) (Treasurer)
NUS Business School (Advisory Board Member)
NUS Business School (Provosts Chair & Professor (Practice)) Past Directorship other than SGX held over the preceding
NUS Engineering Faculty (Provosts Chair & Professor (Practice)) three years (from 30 June 2013 to 29 June 2016)
Accounting Standards Council (Council Member)
Past Directorship other than SGX held over the preceding
Housing & Development Board (Director)
three years (from 30 June 2013 to 29 June 2016)
Bank of the Philippine Islands (Director)
CapitaLand Hope Foundation
Lan Ting Holdings Pte. Ltd Ayala DBS Holdings, Inc (Director)
Pavilion Energy Pte Ltd
Pavilion Gas Pte Ltd (Chairman)
Surbana International Consultants Holdings Pte. Ltd. (Chairman)

1 Appointed on 1 December 2015


Board of Directors Annual Report 2016 17

Performance Overview
Mr Ng Kok Song

Group Overview
Non-Executive and
Independent Director

Date of first appointment as a director

Value Creation & Sustainability


19 September 2013
Date of last re-election as a director
23 September 2015
Length of service as a director (as at 30 June 2016)
2 years 9 months
SGX Board Committee Membership
Nominating & Governance Committee (Member)
Remuneration & Staff Development Committee (Member)
Academic & Professional Qualification
Physics, University of Singapore
Management, Stanford University

Present Directorship other than SGX (as at 30 June 2016)


Listed company

Governance
Nil

Others (Non-Listed company)


Avanda Investment Management Pte Ltd
Wealth Management Institute Pte. Ltd.
Major Appointment (other than Directorship)
Avanda LLP (Partner)
Makena Capital Management LLC
Pacific Investment Management Company LLC (Advisor)
Past Directorship other than SGX held over the preceding
three years (from 30 June 2013 to 29 June 2016)
GIC Asset Management Private Limited
GIC Private Limited
GIC Real Estate Private Limited
GIC Special Investments Private Limited Financials
Hon Sui Sen Endowment CLG Limited
Others
18 Singapore Exchange

Executive
Management
Committee

Mr Loh Boon Chye Mr Muthukrishnan Ramaswami


Chief Executive Officer President

Mr Chng Lay Chew Ms Agnes Koh Mr Tan Boon Gin


Chief Financial Officer Chief Risk Officer Chief Regulatory Officer

Mr Chew Sutat Mr Arulraj Devadoss Mr Michael Syn


Executive Vice President Executive Vice President Executive Vice President
Executive Management Committee Annual Report 2016 19

Performance Overview
Mr Loh Boon Chye Committee of the Singapore Investment in Citigroups international and regional

Group Overview
Chief Executive Officer Banking Association since 2000. Mr Loh is offices, working in Operations,
also a council member and Distinguished Technology and Transaction Banking.
Mr Loh Boon Chye was appointed Fellow at the Institute of Banking &
Chief Executive Officer of Singapore Finance Singapore, and was Chairman of Mr Ramaswami serves on the board
Exchange (SGX) effective 14 July 2015. He the Singapore Foreign Exchange Market of the Infocomm Development Authority
is also an Executive and Non-Independent Committee. He was awarded for of Singapore and is Chairman of its Audit
Director on the SGX Board. Outstanding Contribution to Financial Committee. He is also on the boards
Markets in Asia in the Euromoney Awards of the Energy Market Company (EMC),
With a career in the financial industry for Excellence in 2010. a wholly-owned subsidiary of SGX as
that spans 26 years, Mr Loh was most well as the operator of Singapore's

Value Creation & Sustainability


recently Deputy President and Head of Mr Loh holds a Bachelor of Engineering wholesale electricity market and
Asia Pacific Global Markets at Bank of degree from the National University Accounting and Corporate Regulatory
America-Merrill Lynch from December of Singapore. Authority (ACRA).
2012 to March 2015. He was also the
firms Country Executive for Singapore Mr Ramaswami holds a Masters
and Southeast Asia and a member of its Mr Muthukrishnan Degree in Mathematics (Honors)
Asia Pacific Executive Committee. Ramaswami from Birla Institute of Technology and
President Sciences, and a Post Graduate Diploma
Mr Loh began his career as an Investment in Management Studies (Masters in
Officer with the Monetary Authority As President, Mr Muthukrishnan Business Administration) from the Indian

Governance
of Singapore in 1989. He joined the Ramaswami (Ramu) is responsible Institute of Management, Ahmedabad.
Singapore branch of Morgan Guaranty for various operational aspects of SGX.
Trust Co. of New York in 1992, managing He directly oversees SGXs Membership &
its Southeast Asia fixed-income and International Coverage, Market Data & Mr Chng Lay Chew
derivatives business. Connectivity and the Operations & Chief Financial Officer
Technology functions. These units
From 1995 to 2012, he was with support both the Derivatives and the Mr Chng Lay Chew is Chief Financial
Deutsche Bank AG, where he held Equities & Fixed Income businesses and Officer of SGX where he oversees
various leadership roles including provide exchange-wide support on Finance, Treasury, and Investor Relations.
Head of Corporate & Investment Technology services. Immediately prior to In his role, he also manages the Facilities
Banking for Asia Pacific, Head of Global this, he oversaw all the product groups Management unit.
Markets for Asia, and Chief Executive covering Securities, Fixed Income, Financials
of Global Markets at Deutsche Bank AG Derivatives and Market Data & Access. Mr Chng has more than 30 years
in Singapore. of experience in accounting and
Mr Ramaswami joined SGX as Senior financial management, including
Over the years, Mr Loh has played Executive Vice President and Chief leadership positions in leading local and
a key role in the development of the Operations Officer on 1 July 2007, and international banks. In his previous role,
capital markets in Southeast Asia, was appointed Co-President in July 2010 he was responsible for the finance
having held a number of senior advisory and President in May 2012. functions of DBS Groups operations in
positions. Apart from his directorship all countries outside Singapore. He was
on the SGX Board from October 2003 Prior to SGX, Mr Ramaswami worked also previously CFO of the banks
Others

to September 2012, he has also been with Citigroup from 1996 to 2007 and Greater China business, supporting the
a Director on the Board of GIC Pte Ltd was based in various locations including integration and growth of its Hong Kong
since November 2012. Mumbai, Singapore, Hong Kong, London operations and the expansion into China.
and New York. He was most recently His earlier roles include senior finance
He has served as Chairman of the Capital Chief Information Officer with the positions in JP Morgans Singapore,
Markets Working Group since 1998, International Consumer Business of Tokyo and New York offices.
Deputy President of ACI Singapore, the Citigroups Global Consumer Bank, based
financial markets association, since 1999 in New York and over the years, held Mr Chng serves on the board of EMC and
and Chairman of the Debt Capital Markets progressively senior executive positions is also a board member of the Singapore
20 Singapore Exchange

Executive
Management
Committee

Accountancy Commission, which Mr Tan Boon Gin Mr Chew joined SGX in June 2007
oversees the development of the Chief Regulatory Officer and was appointed to the Executive
countrys accountancy sector, and a Management Committee in May 2008.
director of the Philippine Dealing System Mr Tan Boon Gin joined SGX as Chief He is also Chairman of SGXs Bull Charge
Holdings Corp, a private corporation that Regulatory Officer on 15 June 2015. CSR initiatives.
provides financial market infrastructure He heads the Regulation unit that
services in the Philippines. performs various regulatory functions Prior to SGX, he was previously Group
to promote a fair, orderly and Head, Investment & Treasury Products
Mr Chng is a member of the transparent market. at Standard Chartered Bank, where
New Zealand Institute of Chartered he was responsible for the strategy
Accountants and the Institute Before joining SGX, Mr Tan was the and development of the banks existing
of Singapore Chartered Accountants. Director of the Commercial Affairs geographic franchises as well as new
He holds a Bachelor of Commerce and Department of the Singapore Police ventures for Global Wealth
Administration degree from New Force. Prior to this, Mr Tan held several Management.
Zealands Victoria University. appointments at the Monetary
Authority of Singapore (MAS) including Before Standard Chartered Bank,
Director of the Enforcement Division, Mr Chew was with OCBC Securities,
Ms Agnes Koh Director of the Corporate Finance where he headed the development
Chief Risk Officer Division and Executive Director of the of non-traditional investment products
Investment Intermediaries Department. and services for its customers. He began
Ms Agnes Koh was appointed Mr Tan was seconded to MAS after his career with DBS Bank in the Custody
Chief Risk Officer of SGX from January serving as a District Judge at function, and held varying portfolios
2014. She is responsible for championing Singapores Subordinate Courts. in strategic planning and business
and leading enterprise risk management development for institutional banking,
activities across the organisation, Mr Tans earlier roles include serving as well as private clients.
formulating the risk framework and as a Justices Law Clerk at Singapores
assessments for new products and Supreme Court and a Deputy Public Outside of SGX, he is a Fellow of the
business strategies, and managing the Prosecutor at the Attorney-Generals Institute of Banking and Finance
clearing risk of SGXs securities and Chamber, where he specialised in Singapore (IBF) and Chairman of IBFs
derivatives clearing houses. Since corruption and white-collar crime, Committee for CF Securities & futures.
September 2015, Ms Koh oversees the before leaving to practise at Messrs He sits on the Presidents Advancement
business continuity management of SGX. Sullivan & Cromwell in New York. Advisory Council at the National
University of Singapore and serves as
Ms Koh joined SGX on 1 December 2005 Mr Tan is an advocate and solicitor and industry advisor for the Government
as Vice President in Risk Management holds degrees from the University of Parliamentary Committee for Finance,
and has worked through various roles Cambridge and Harvard Law School. Trade & Industry. In addition, he is Vice
within risk management in her 10 years Mr Tan was also awarded the Public Chairman of Kaki Bukit Citizens
with SGX. Prior to joining SGX, she had Administration (Silver) Medal in 2010. Consultative Committee and is a Director
more than 11 years of experience in of Caregivers Alliance Limited.
managing the foreign reserves of the
Monetary Authority of Singapore and Mr Chew Sutat Mr Chew graduated with a Bachelor
was also an auditor with a public Executive Vice President of Arts (1st Class Honours) degree in
accountancy firm. Ms Koh is a Chartered Philosophy Politics & Economics (PPE)
Accountant and a Member of the Mr Chew Sutat is Head of Equities & from Oxford University, Keble College
Institute of Singapore Chartered Fixed Income, where he is responsible in 1996. He also holds a Master of Arts
Accountants. She holds a Bachelor for the equities and fixed income listing, degree from Oxford.
of Accountancy (Hons) from National trading and post-trade businesses and
University of Singapore. securities product sales for SGX globally.
Executive Management Committee Annual Report 2016 21

Performance Overview
Mr Arulraj Devadoss Mr Syn joined SGX on 1 March 2011 with

Group Overview
Executive Vice President a background in investment banking and
investment management, having worked
Mr Arulraj Devadoss joined SGX on in both London and Singapore. Prior to
1 December 2011 as Head of Human SGX, he was Chief Operating Officer of
Resources and was appointed to the DBS Asset Management, a subsidiary
Executive Management Committee in of DBS Bank.
May 2012.
Mr Syn serves on the boards
Mr Devadoss is an industry veteran with of EMC, Singapore Commodities
more than 26 years in human resources Exchange and AG Delta. He also serves

Value Creation & Sustainability


management, and comes with a rich on the advisory board of CAMRI
global experience from the banking and (National University of Singapore) and
financial industry. In his 20 years with the council of Economic Society of
Standard Chartered Bank, he worked in Singapore.
roles across several businesses and
spanning various aspects of human Mr Syn graduated with MA and PhD
resources. In his last role, he was the degrees from Gonville & Caius College
Global Human Resources Head for the in Cambridge University.
Client Relationship Business of Standard
Chartered Bank.

Governance
Mr Devadoss graduated with
a Bachelor of Arts Degree in Economics
from University of Madras, India in 1982.
He also holds a Honours Diploma in
Personnel Management and Industrial
Relations from Xavier Labour Relations
Institute, Jamshedpur.

Mr Michael Syn
Executive Vice President Financials

Mr Michael Syn is Head of Derivatives


at SGX.

Mr Syn has management responsibility


for SGXs award winning derivatives
trading and clearing business, offering
a full suite of derivatives products across
Asian equity indices, commodities and
Others

foreign exchange. He also oversees


Energy Market Company (EMC), a
wholly-owned subsidiary of SGX as well
as the operator of Singapore's wholesale
electricity market.
22 Singapore Exchange

Organisation

CEO
Loh Boon Chye

President CFO Unit Corporate Derivatives Equities


Strategy & Fixed Income

Muthukrishnan Chng Lay Chew Nicholas Michael Syn Chew Sutat


Ramaswami Gardiner

Membership & Market Data & Technology Operations


International Connectivity
Coverage

Muthukrishnan Ng Kin Yee Tinka Gupta Jarod Ong*


Ramaswami

* Appointment is effective from 1 August 2016.

762 7 years
Number of Average
Employees1 Length of
Service

89% 29hrs
Employee Average
Retention2 Training Hours
Per Employee
1 Permanent headcount including EMC but excluding staff on No Pay leave
2 Attrition rate of 11%
Organisation Annual Report 2016 23

Performance Overview
Group Overview
Value Creation & Sustainability
Human Legal, Marketing & Risk Regulation Internal
Resources Compliance Communications Management Audit
& Corporate
Secretariat

Arulraj Glenn Seah Teo Ai June Agnes Koh Tan Boon Gin Sunil Kumar
Devadoss

Governance
Financials

Gender Pay Gap (across employment categories) Gender Diversity


1

2
48% 52%
Male Female
3
Others

5
Age Diversity
6
Male Female
7 Below 30 14%
Note: 1 to 9 are job grades
8 (where 1 is most senior): a
9
band on the right indicates 30 50 75%
males are paid higher, while

15% 10% 5% 0% 5% 10% 15%


a band on the left indicates
females are paid higher. Above 50 11%
24 Singapore Exchange

Value This is our second Integrated Report which describes how Singapore
Exchange (SGX) maintains a sustainable business and generates
Creation long-term value. The report covers how we create value through our
business model using four forms of capital. The material factors that
influence our business are described together with our priorities, the
risks that we face and how we manage them. We have also included
a section that summarises our approach towards Sustainability and
our progress to date, with a focus on SGX's material Environmental,
Social and Governance matters.
SGX is a diversified exchange group that
runs key financial market infrastructures. Forms of Capital
We operate the Singapore securities
market, a platform for listed companies Our ability to create shareholder value is highly dependent upon the efficient
to gain access to capital and for investors allocation and effective deployment of our financial, human, intellectual and
to participate in Asias economic growth. social capital.
We also operate a pan-Asian derivatives
exchange. Through our innovative
derivative products covering Asian equity 4 Forms of Capitals:

1 2
indices, commodities and currencies, we
offer global market participants a single
point of access into Asian markets. Our Financial Capital Human Capital
market infrastructures facilitate efficient

3 4
capital allocation and price formation for
exchange-listed financial instruments.
We ensure that our clearing houses
Intellectual Capital Social Capital
and depository are well-capitalised and
meet the highest regulatory standards.
Domestic and global investors are able to
use our products for wealth management
and capital formation, and to manage
their risks in a safe and trustworthy
environment.

As a Self-Regulatory Organisation (SRO),


Forms of Capital
SGX has a dual and equally important role
as the front-line market regulator. We
Financial Capital
ensure that listed companies meet their 1.
Our share capital and retained profits; this is used to recruit and retain staff, invest
ongoing obligations to investors, and that
in best-in-class technology and infrastructure, capitalise our two clearing houses
orders to buy and sell shares and other
and acquire assets in support of our growth strategy.
exchange-listed financial products are
executed in a fair, orderly and transparent
Human Capital
manner. SGX is a systemically important 2.
The expertise and potential of our staff; as the operator of key financial
financial infrastructure of the Singapore
market infrastructures, we rely on our highly skilled and motivated staff to
financial system.
ensure operational resilience, innovative product and business development,
For more information on Self-Regulatory and the successful navigation of global regulatory changes.
Organisation, go to: pages 6468

Intellectual Capital
3.
Our knowledge-based intangible assets and software, proprietary rights to
our market data, as well as our brand and institutionalised knowledge base, in
the form of policies, procedures and processes.

Social Capital
4.
Our collaborative relationships with various stakeholders, including but not
limited to our regulators, market participants and the communities in which we
operate; we also leverage our position as the leading exchange in Singapore,
the only Asian economy rated AAA by all three major credit rating agencies.
Value Creation Annual Report 2016 25

Performance Overview
Business Model What We Deliver

Group Overview
Contribution to total revenue:

Issuer
Services

Market
Data and
Connectivity Shareholder Return

Value Creation & Sustainability


Equities Securities
and Fixed Trading and
Income Clearing
Capital Sustainable
Derivatives
Appreciation Income/
Dividend

Post Trade
Services

Governance
Our Businesses Creating Sustainable and Long-Term Value

Our businesses cover a range of financial products


and services.
Equities and Fixed Income A pan-Asian derivatives The largest securities
Issuer Services
Securities Trading and Clearing exchange with the worlds market in Southeast Asia
Financials
Post Trade Services most liquid offshore market for with a total market
the benchmark equity indices capitalisation exceeding
of China, India, Japan and S$900 billion. We are an
We provide the entire value chain of services for the
Taiwan. We are also the international listing venue
Singapore securities market, from facilitation of capital leading commodities exchange with more than 40% of our
raising to enabling trading, clearing and settlement of for contracts on iron ore listed companies based
shares and other listed instruments. and rubber. outside of Singapore.

Derivatives
We operate a pan-Asian derivatives market offering
Others

futures, options and swaps covering a broad selection


of commodities, currencies and Asian equity indices, A systemically important The premier risk
serving an international clientele. financial infrastructure management venue
meeting the highest in Asia; we are one of the first
governance and regulatory exchanges globally to adopt the
Market Data and Connectivity standards in support of Principles for Financial Market
Singapore as a global Infrastructure, and certified
We offer sophisticated connectivity solutions to access
financial centre. as a Qualifying Counterparty
SGX markets, provide data to support trading decisions
under the Basel III framework.
and deliver indices to better profile our markets.
26 Singapore Exchange

Material SGXs continued success in maintaining a sustainable


business and generating long-term shareholder value is
Factors influenced by a number of material factors. Each material
factor brings unique risks and opportunities to the
organisation, and is a key consideration in our approach to
strategy formulation and execution. We regularly review
these factors to assess their impact on our business model
over the near, medium and long-term future.

1 Talent
2 Changes in
Global Regulatory
Landscapes
3 Global
Macroeconomic
Conditions
The exchange sector is a specialised industry Exchanges and financial institutions globally In the near to medium term, the single
relative to other financial services. Our have been subjected to increasing levels of most critical factor influencing our
business model and value creation process regulation since the global financial crisis business performance is volatility in the
require talent and expertise that are not of 2008. While stronger regulations will Asian financial markets, which is in turn
readily transferable from the wider financial ultimately result in a more sustainable particularly susceptible to volatility in
services industry. Our continued success is global financial system, increased regulatory the global economy. In the long term, the
largely dependent on our ability to attract, requirements may lead to higher costs of outlook for our businesses will largely be
develop, retain and engage high-calibre business and impact the pace of industry determined by structural changes to the
talent. With Board-level guidance provided development in the near term. Our global economy.
by the Remuneration & Staff Development continued ability to maintain the highest
Committee (RSDC), we constantly invest in global regulatory standards, both in the The performances of our Equities and
the recruitment and development of staff immediate future and over the long term, is a Derivatives markets are driven primarily
required to create innovative products and competitive advantage that will enable us to by the magnitude and frequency of
provide premier services to our clients. achieve our growth objectives. fluctuations in the prices of stocks and
We invest in our people throughout their other asset classes. Higher market
careers, and seek to provide diverse International regulatory bodies have volatility often leads to increased demand
opportunities for development, as well as introduced many regulations after the for trading and hedging, and may create
competitive compensation and benefits. 2008 crisis. An important cornerstone is additional opportunities for arbitrage and
to incentivise trading on exchanges and speculation. Conversely, sustained periods
Our talent strategy seeks to ensure that clearing by central counterparties (CCPs) of low volatility, especially in bearish
we maintain a diverse and highly skilled while imposing higher capital requirements conditions, may result in lower levels
workforce over the long term. We on non-centrally cleared contracts. In the of market activity.
recognise that SGX must be at the forefront near term, SGX is well placed to navigate
of responsible employment practices and these new regulatory trends, being one of This past year, our businesses were
position SGX as an employer of choice to the first exchanges globally to adopt the significantly influenced by the manner
continually attract talent. This is critical to Principles for Financial Market Infrastructure in which market participants adjusted
sustain a best-in-class talent base over the introduced by CPSS-IOSCO. We are also to changes in benchmark interest rates,
long-term future. certified as a Qualifying Counterparty under slower growth in the global economy and
the Basel III framework. volatile commodity prices.
We have in place policies and practices
to make SGX an attractive place for our New global regulations affecting SGX will The volatility in the Asian equity and
employees to contribute to our value continue to be phased in over the coming commodity markets has highlighted
creation process. Please read more few years. These will include margining on Singapores role as a multi-market
about our talent management and other un-cleared derivatives, the supplemental jurisdiction and SGX as an offshore hub
diversity efforts in our Sustainability leverage ratio for financial institutions, and for risk management in Asia. At a time
Report from pages 40 to 42. the fundamental review of the trading book when some onshore markets experienced
by Bank for International Settlements. While uncertainty and trading restrictions, SGX
the ultimate goal of the regulators is the was able to provide a reliable alternate
establishment of sustainable and stable venue for market participants.
markets, the pace of introduction of the many
new and previously untested regulations
may cause unintended consequences in the
markets in the near term.

In the long term, in order to stay ahead of the


competition, SGX will have to continuously
navigate increased regulatory complexities,
and adapt to how members, participants
and competitors position themselves in the
evolving global regulatory landscape, with its
impact on balance sheet management, risk
appetites and business strategies.
Material Factors Annual Report 2016 27

Performance Overview
4 Competition
5 Technology

Group Overview
SGX faces competition in both our Equities and Derivatives markets Technology is both a key enabler as well as a potential source of
from regional and global exchanges. Increased competition may significant disruption to our business model in the long run. We rely
lead to either lower volumes or lower margins, both of which will on technology across all aspects of our business and operations,
negatively impact our business performance. In the near to medium including our regulatory and risk management functions. We focus
term, we remain confident that we can compete favourably against on enhancing operational resilience, while simultaneously seeking
existing and potential competitors, on the strength of our unique to future-proof our core technology and infrastructure for the
value proposition as the only exchange offering single point access long term by making appropriate investments. Our approach in
into key Asian markets. Our well-capitalised clearing houses meet continually investing to refresh and upgrade technology is crucial

Value Creation & Sustainability


the highest global regulatory standards and SGX is a premier risk to our long-term success as a systemically important financial
management centre in Asia. infrastructure of Singapore.

SGXs competitive advantage is reflected in our recent success As a critical infrastructure provider of the Singapore financial
with offshore derivatives such as the SGX FTSE China A50 index system, we contribute to the industry development of security
futures and the SGX Nifty 50 index futures and options. Through standards and practices to address global cyber security risks. We
Singapores geographical proximity to major Asian economies, and are also progressively investing in new technology capabilities to
our first mover advantage offering international investors access improve our ability to anticipate, assess and manage these risks as
into derivatives of key Asian equity indices, SGX is well positioned they evolve over time.
to benefit from the substantial volume of spillover trading from
onshore Asian trading venues. The near to medium term trend is for exchanges to become

Governance
integrated platforms where a broad range of products are easily
MSCI postponed the inclusion of Chinese shares into its index in listed and traded, including products traditionally traded over the
2016. Future inclusion could potentially open up the large Chinese counter. Similarly, a clearing house clears various asset classes
market to the global fund management industry. Western exchanges and offers efficient margin usage. SGX is progressing along this
are gearing up to provide offshore services to the Chinese market. trajectory, supported by innovations in trading platforms and
In response to this increasing competition, we will launch products connectivity, as well as our progressive move towards standards-
strategically to widen our Asian product suite and create synergies based application programming interfaces (API). An open-API can
across different asset classes such as equities, foreign exchange and be a differentiating opportunity for SGX to provide access and
interest rates derivatives. capability to a larger addressable market but can also lead to the risk
of lowering the bar for customers to switch to a competitor.
The landscape for global exchanges is evolving rapidly. In recent
Financials
years, we have seen exchanges expanding into adjacent businesses The development of disruptive technologies such as Blockchain or,
such as indices and electronic trading platforms, as well as scaling more generally, distributed ledgers, could change the landscape
up through mergers and acquisitions. These two trends will of our industry over time. As a result, we actively monitor and
impact our strategic positioning over the long term. The rise of participate in the development of such technologies as we explore
large international exchange groups will widen the gap in market innovative business opportunities.
share between these global players and national exchanges. In
response, SGX is exploring inorganic opportunities, partnerships
and joint ventures that would offer synergies, especially in product
development and internationalising our distribution. For example,
our recent bid for the Baltic Exchange will enable us to achieve
a vertical integration of the entire value chain, from provision
Others

of market data to the trading and clearing of freight derivative


contracts, while taking advantage of Singapores location as a
maritime hub.
28 Singapore Exchange

Priorities Our long-term priority is to efficiently and effectively enhance


SGXs value proposition as the leading single-point access platform
into Asia across all major asset classes. We will continue to focus
on maintaining strong corporate governance practices as well as
invest in technology, which is a key enabler to our business. This
will enable us to maintain a sustainable business in the long term.
In FY2017, we will continue our efforts to improve the Singapore
securities market, as well as to build upon our success in the
diversification of our business model across geography and asset
classes. At the same time, we will seek to maintain cost discipline
and manage expenses prudently.

1. 2. 3.
Continue to Diversify business mix Maintain
improve liquidity of across geography and cost discipline
Securities market asset classes

a. Improve visibility a. Grow market for FX futures a. Focus on delivering operating


of our listed companies Launch more FX contracts leverage
Deepen investor outreach with focus on RMB and Pace operating expenses and
geographically and sectorially ASEAN currencies keep them aligned with
with targeted marketing business growth
Particular focus on Consumer, b. Broaden securities offerings
Digital, Healthcare, Marine Develop secondary market
and Offshore, Minerals, Oil for fixed income with
and Gas, and Real Estate BondPro trading platform
Innovate on ETFs including
b. Roll out new products launch of leveraged ETF
and services
New Post Trade System c. Accelerate adoption
for brokers of Index Edge
Digital depository services Drive proposition for bespoke
for CDP users index calculations
Launch more index products
c. Build on recent success in with focus on priority
engaging retail investors industry sectors, including
through SGX Academy shipping and REITs

d. Strengthen SGX
market presence
Build stronger links with
Singapore wealth and asset
management industries
Participate in industry
dialogues on distributed
ledgers/Blockchain and
conduct selective pilots
Priorities Annual Report 2016 29

Business Unit Priorities

Performance Overview
1. Equities and Fixed Income
Issuer Services Securities Trading and Clearing Post Trade Services
In FY2017, we will continue to build on Our primary focus will be the The ongoing development of the New
our strengths in established industries continuation of efforts to improve the Post Trade System (NPTS), in close
in Singapore, and target new growth quality and tradability of the market engagement with the industry and
sectors by attracting more regional which have started to deliver results. regulators, will remain our main focus in
and international companies to raise We look to expand our pool of market the coming financial year. With the start
capital on our Equities and Fixed makers and liquidity providers to of the new financial year, a significant

Group Overview
Income platforms. We remain increase participation and widen stocks milestone has been achieved. Brokers
committed to supporting local small covered. Through active engagement of will be able to connect directly to the
and medium enterprises in their fund our members and other market SGX Post Trade environment using their
raising efforts by expanding our participants, we continue to seek own back office systems, thereby
collaborations with Government feedback in our ongoing efforts to achieving increased operational
agencies and private platforms. We will create a vibrant and robust market. SGX efficiency and flexibility to offer
also actively support listed companies will also continue to educate and grow differentiated services to their
in their governance and communication the retail investor base. In the coming customers. In addition, both CDP and
with investors and shareholders with financial year, we will step up efforts to the brokers will be able to offer
our range of services and corporate attract more overseas institutions to electronic contracts and account

Value Creation & Sustainability


access activities. On Fixed Income, participate in SGX as well as deepen the statements, as part of our ongoing
we aim to provide issuers with greater existing institutional interest. We have effort to reduce the industry's
access to wholesale fund raising and made headway in extending product environmental footprint.
price discovery through our bond offerings and increased the number of
trading platform as well as for retail available ETFs, Structured Warrants
investors to buy corporate bonds with and REITs. At the same time, we expect
the Bond Seasoning Framework. to introduce new and innovative
products to better cater to different
trading and investment needs.

Governance
2. Derivatives
Our overarching focus will continue to be on the development of a pan-Asian suite of products and services covering all major
Asian economies. We will continue our efforts to pivot from a product-centric development strategy to one centred on platform
and distribution. Tactically, we will focus on three key areas:

1. Deliver the next-generation SGX 2. Increase global distribution for 3. Continue incubation of Asian
TITAN platform for derivatives SGXs unique offering of pan-Asian market opportunities for the future:
trading, clearing and collateral liquidity on a world-class exchange, Singapore-hubbed power and gas
management, with the objective to especially benchmark China and derivatives, RMB clearing services
provide comprehensive self-help India equity futures, rapidly anchored on our China currency Financials
technology for the increasingly growing Asian currency futures and futures and ASEAN futures.
international profile of our Singapore-hubbed seaborne
Derivatives market participants; our commodities.
new platform will enhance
efficiency in straight-through
processing as well as round-the-
clock reconciliations and risk control.
Others

3. Market Data and Connectivity


Our priority is to drive continued growth for our market data and connectivity business, including the newly launched index
business. With the launch of TITAN, participants will be able to connect to our Derivatives market with new low latency APIs
(ITCH and OUCH) at significantly higher throughput. We are also expanding our colocation facility by 70% to meet continued
demand for our colocation and hosting services. For our Index business, we see a good response from the market for our
bespoke index calculation service and are scaling up support for leading investment banks in the region. We will expand our
suite of SGX proprietary indices to have regional coverage and introduce innovative factor-based (Smart Beta) indices.
30 Singapore Exchange

Risk
Management

Key Risks Faced by SGX

Exchange Clearing
House

SGX

Central
Depository

Operational Risks: Regulatory and Credit & Liquidity Risks:


We are fully committed to Reputation Risks: Our risk control is performed
operational resilience against We have zero tolerance towards to the highest standards to address
technology risks, cyber risks and events that could impact the operation risks of default of a member
risks to business continuity. of a fair, orderly, transparent and or participant.
efficient marketplace.
Risk Management Annual Report 2016 31

Performance Overview
Types of risks What are we doing about it?

Group Overview
1. Risks arising from default of a participant SGX has established layers of defences to safeguard its
Credit Risks SGX is a financial infrastructure that operates clearing house against members credit risk.
a business model different from most financial
institutions. As an exchange, SGX matches buyers Good quality members are screened at admission and
with sellers. As a clearing house, SGX eliminates reviewed regularly as part of ongoing supervision. The
counterparty risk by serving as the central collection of margins for trades done and active monitoring of
counterparty in every trade SGX acts as a buyer members positions ensure that risk does not concentrate on
to every seller and a seller to every buyer. In so any particular member without appropriate mitigation actions
doing, SGX plays the vital role as the risk by SGX. Our risk control is performed to the highest standards

Value Creation & Sustainability


management hub and by prudent risk and SGX fully meets the PFMI-IOSCO1 best practices.
management, limits contagion; the transfer
of credit risk across the financial ecosystem. One of the cornerstones of SGX risk management is a robust
default management protocol to ensure that in the rare event
Investors access SGX through members of SGX, of a member default, trades belonging to the defaulted
who are required to meet payment obligations in member can be managed in an orderly fashion. This preserves
a timely manner. SGX collects margin from its market continuity and limits the market risk SGX faces.
members multiple times daily to reduce credit risk.
The default fund of the clearing house is a pool of resources
In this business model, SGX is put at risk only in contributed by SGX and members to buffer against any losses
the rare instance that a member defaults. In this arising from a default. SGX is committed to the safety of the

Governance
scenario, our clearing house will need to manage Singapore marketplace and as a result contributes at least 25%
and close-out the open positions of the defaulted of the default fund using its own capital, one of the highest
firm. SGX and other members may need to absorb commitment levels among global clearing houses. Our default
the losses from the resulting market risk. fund is strong enough to withstand multiple member defaults.

Furthermore, to protect investors in a default, customer


monies are segregated and held in trust.

2. Risks arising from default of a participant SGX sets aside resources to cover liquidity risks. To provide
Liquidity In the rare event of a member default, SGX may sufficient headroom, we perform a liquidity stress test which
Risks have a need for liquidity in honouring payment simulates a variety of hypothetical default scenarios under
obligations to other members. This is because it severe stress conditions involving members and commercial Financials
will no longer receive payments from the banks. This practice ensures that even under such extreme but
defaulted member. plausible scenarios, SGX will have sufficient cash resources and
credit lines.
In addition, in facilitating day-to-day settlement
of payments and safekeeping of customer SGX actively manages counterparty risk exposure to
monies, the clearing house uses commercial commercial banks by admitting only financially strong banks
banks. A counterparty default of such a and monitoring their credit quality. Concentration limits apply
commercial bank, though highly unlikely, to our exposures to each bank, while standby liquidity lines
will expose SGX to liquidity risks. from other financial institutions are in place.
Others

1 Principles for Financial Market Infrastructures International Organization of Securities Commissions.


32 Singapore Exchange

Risk
Management

Types of risks What are we doing about it?

3. No direct market risk Under our investment framework, our monies are prudently
Market As a financial infrastructure, SGX observes placed as term deposits across multiple commercial banks in
Risks strict regulatory requirements in managing its Singapore. This ensures SGXs resources are liquid and of the
resources and maintaining capital adequacy. highest quality.
The company maintains a strong balance sheet
and currently does not access the debt market to
raise capital for its business activities. Our assets
are primarily cash resources and not investments
in risky securities. Hence, SGX is not directly
affected by market risk except in the rare event
of a member default, as explained above.

4. Operational resilience is paramount to our Our systems are constantly monitored, and required to meet
Operational business success specic performance criteria such as predictable response times
Risks SGX is a financial infrastructure that is heavily for critical business transactions, latency, capacity and
dependent on technology. We are committed to expected current, future and peak load. SGX technology and
our trading, clearing and depository systems operations personnel work from two locations supported by
adhering to a high standard in terms of latency, dual data centres. The backup systems are designed to be
volume capacity and service availability. Any running all the time in active or fault tolerant conditions and have
service interruptions could lead to reputational recovery time objectives in line with PFMI-IOSCO standards.
risk and potential loss of revenue.
SGX has a thorough process for self-assessment of our
Operational resilience also extends to our human capabilities, using both past experiences and the experiences
resources. SGX needs to protect its staff from a of our global peers to drive continuous improvements that will
wide range of threats to ensure market provide greater operational resiliency and preparedness for
continuity in the event of civil crises such as business continuity.
terrorism or pandemic.
We continually assess potential scenarios and threats that
could disrupt the exchange and clearing house, and perform
business contingency drills regularly to ensure that staff
respond effectively and SGX services are recovered and
validated in the fastest possible time to minimise the impact
on market users.

Increasing threat of cyber-attacks SGX has invested in new capabilities to defend against
The Singapore financial centre has become a cyber-attacks and has also increased staff training and
target for increasing cyber-attacks. Similar to awareness of cyber-crime. This ensures that our people and
other financial institutions, we have experienced a systems are always on alert and able to respond to cyber
rise in such activities compared to previous years. threats. We will continue to proactively identify areas of
We have been vigilant in monitoring cyber threats improvement in our defences to address the emerging and
and improving our defences. evolving cyber security risks.
Risk Management Annual Report 2016 33

Performance Overview
Types of risks What are we doing about it?

Group Overview
5. Risk of not maintaining the highest regulatory SGX strives for the highest regulatory standards in the
Regulatory standards oversight of listed companies and member firms with zero
Risks & As a regulator of the Singapore marketplace and tolerance towards events that could impact the operation
Reputation public companies, SGX has to maintain the highest of a fair, orderly, transparent and efficient marketplace.
reputation for supervision and for adherence to
Risks
regulation. A loss in confidence in the quality of Our market surveillance system detects trading
our marketplace could have serious impact on irregularities. Where appropriate, SGX issues public alerts
SGXs competitiveness. to investors. Our admission and continuous listing
requirements are constantly reviewed to address new risks

Value Creation & Sustainability


arising from a changing global business landscape. Examples
of such changes include increased cross-border listings from
emerging countries and listings of companies from
developing fields of technology. The regulation of such listed
companies has to be refined in line with their differing risk
characteristics and performance metrics.

In operating a disclosure based regime, transparency is crucial


to maintaining trust in our markets. This includes transparency
on the part of the regulator. SGX therefore seeks to provide a
high level of transparency regarding its regulatory philosophy

Governance
and actions. Market participants are similarly subject to high
levels of transparency. This promotes a well-educated and
informed market.

Financials
Others
34 Singapore Exchange

Sustainability

Board Statement Report at a Glance

Sustainability has become a critical success factor for This report summarises our approach
companies to ensure long-term value creation, and there has towards sustainability and our progress
been a growing demand among investors for enhanced
transparency on listed companies Environmental, Social and
to date, with a focus on addressing SGXs
Governance (ESG) practices. In FY2016, SGX responded to this material Environmental, Social and
by announcing the Comply or Explain sustainability Governance (ESG) matters.
reporting rule and guide which seeks companies listed on the
SGX to issue a sustainability report from financial year 2017. Report Scope
In line with usual practice, SGX had conducted a public The report covers the performance of our consolidated entities
consultation to obtain the views of stakeholders prior to the from 1 July 2015 to 30 June 2016 (FY2016). We have included
final announcement of the rule. This was preceded by the the historical data for the previous two years of FY2014 and
launch of the SGX Sustainability Indices a suite of equity FY2015 for comparison, where available.
indices composed of SGX-listed stocks which are considered to
be clear frontrunners in ESG standards. Reliability and Methodology
We have produced our report in accordance to the
At SGX, management, with guidance from the Board, sets the internationally recognised GRI G4 guidelines Comprehensive.
tone for its sustainability efforts and identifies, manages and The Comprehensive option requires reporters to report fully
addresses ESG factors that are material to its business. Some against all recommended indicators for ESG factors identified as
highlights of the year included: being material. We have chosen the GRI G4 reporting guidelines
due to its robust guidance and longstanding universal
The formalisation of SGXs environmental policy application, which allows for comparability of our performance.
to focus efforts on managing the usage of energy and This report also takes into consideration the primary
other resources components of report content as set out by the SGXs
The formalisation of SGXs talent strategy to sustain Comply or Explain requirements for sustainability reporting.
SGXs competitive edge in attracting, retaining and
replenishing talent while ensuring diversity and inclusion Our data is reported in good faith and to the best of our
in the workplace knowledge. We continue to work on strengthening our data
Extended outreach of SGX Academy with the inaugural collection processes.
investment education symposium for teachers, with the
belief that the knowledge they acquire will be imparted to
future generations

SGX will continue to make improvements in its sustainability


practices and work with the companies listed on SGX towards
the common goal of embedding sustainability in their
businesses.
Sustainability Annual Report 2016 35

Performance Overview
Our Esg Risks and Opportunities

Group Overview
Our enterprise risk management system includes the identification and assessment of ESG risks and opportunities. This is
supplemented by our stakeholder engagement and materiality assessment processes. Where we have assessed the impacts of our
ESG risks and opportunities to be substantial, we have addressed them, as charted below:

Human Resource Risks Technological Risks Climate Change Risks


Our people are a key asset, making Providing reliable technological platforms As a small island state, Singapore is
talent attraction and retention crucial is critical to business continuity, as vulnerable to the rising sea levels

Value Creation & Sustainability


in Singapore's highly competitive technology-related service disruptions resulting from climate change.
financial market. Our talent strategy have the potential to cripple our Although our environmental
ensures SGX remains an attractive operations. To address this, we will footprint is small, we remain prudent
place to work. continue to enhance our recovery and manage our environmental
For more details, go to: page 40 capabilities, processes and footprint, as guided by our
communications to effectively Environmental Policy.
manage crisis situations. For more details, go to: pages 43 to 44

Governance
Risks

Sustainability-related Opportunities Diversity of our workforce


products and services
Financials
The gender, age, ethnic and
Non-financial risks and accountability nationality diversity of our
are becoming increasingly important workforce is part and parcel of our
among investors. This represents an corporate culture, which embraces
opportunity for us. Our SGX varied and unique perspectives. In
Sustainability Indices, which this way, our workforce diversity
comprises liquid SGX-listed stocks represents an opportunity for us to
screened in accordance with ESG lead by example.
criteria, was launched recently to For more details, go to: pages 41 to 42
provide a transparent way for
investors to assess the sustainability
Others

practices of our issuers.


36 Singapore Exchange

Sustainability

Stakeholder Engagement Public Consultation on Sustainability Ruling


and Materiality Assessment with External Stakeholders1
There has been a growing demand from investors for enhanced
Stakeholder Engagement transparency on ESG disclosures. As a preparatory step in the
We maintain a frequent dialogue with our stakeholders and process of developing a Comply or Explain listing requirement
inform them about our sustainability plans and actions. Their for sustainability reporting, in late FY2015, SGX launched a
feedback, interests and concerns help us to focus on what is consultation exercise. Over a period of nine months, SGX
important in sustaining our business and generating long-term gathered feedback from issuers, investors, sustainability
value. We highlight here a number of engagements with professionals and the public, through targeted surveys for
stakeholders during the year: issuers and investors, focus group discussions with listed
companies, and a call for public feedback. This has equipped us
Highlights of Stakeholder Engagement During the Year with a better understanding of our stakeholders expectations
Annual Investor Perception Study 2016 and needs, which will allow us to refine the requirements of the
Since FY2015, SGX has engaged a third-party service provider new Listing Rule and Guide for the benefit of our stakeholders
to conduct a perception study to gauge the evolution of market all round. SGX launched the new Sustainability Reporting Guide
sentiment on the companys strategy, management team, on 20 June 2016.
investment case, capital allocation, investor communications
and corporate governance. In-depth interviews were conducted Supplier Survey:
with past, current and potential shareholders, followed by a Influencing our suppliers on responsible business practices
comprehensive analysis of the results. In FY2015, we instituted a mandatory Supplier Sustainability
Survey (Survey) for potential new suppliers to SGX as part of
our request-for-proposal (RFP) process. Beginning FY2016, we
Key findings from the Investor Perception Study commenced extending the Survey to vendors on the SGX
Investor sentiment on SGXs corporate governance Preferred Vendor List. The Survey gathers information from
suppliers on their corporate governance, workplace practices
practices remain positive
and environmental management, and allows us to assess their
75% of the investors felt that SGXs corporate
sustainability values and behaviours. By including vendors
governance practices surpassed our global peers
sustainability practices in our selection criteria, we ensure we
SGX was praised for our alignment with minority
support the right behaviours throughout our supply chain.
shareholders, as evidenced by our dividend track
record, transparency, independent Board and lack of
SGX Academy:
imprudent M&A
Training teachers on financial literacy
SGX received varied feedback on its governing practices For many years, our SGX Academy has educated and trained
retail investors as well as professional investors and traders
as a market regulator
on financial literacy and investment knowledge. FY2016 saw
55% of the investors who commented on SGXs role as
the extension of our investor education partnership with the
a regulator said that we were effective in this role, as
National Institute for Education (NIE), where approximately
we have strengthened efforts to uphold market
700 NIE-trained teachers attended our inaugural investor
integrity and safeguard investors
education symposium for educators. During the symposium,
Of the 44% who felt we were not doing enough, the
our SGX Academy trainers gave talks on topics such as value
majority stated that SGX should be more proactive in
investing and building an income portfolio, empowering
pushing for greater market openness and accessibility,
the teachers, who play a pivotal role in moulding future
minority shareholder engagement, and transparency,
generations, with valuable financial knowledge. Following
rather than adopt a perceived box-ticking approach to
the success of the event, we will hold the investor education
regulation
symposium annually in future.
17% of the investors cited SGXs introduction of
mandated sustainability reporting as a positive
example of SGXs corporate governance

1
More information on the consultation paper can be found on
http://www.sgx.com/wps/wcm/connect/sgx_en/home/regulation_v2/consultations_and_publications/PC/Consultation-Paper-on-Sustainability-Reporting-Comply-or-Explain
Sustainability Annual Report 2016 37

Performance Overview
Participating in the Sustainability Dialogue

Group Overview
SGX regularly supports and contributes to the development of ESG practices in Singapore and worldwide. Besides playing a
critical role with our contributions to the Singapore Corporate Governance Framework, we have contributed to other similar
efforts that include:

1

Developed new listing rule and
sustainability indices
Require sustainability disclosure by
2

Participation and attendence in
committees and events
Participation in the Singapore
3

Hosting of ESG events

Integrated Reporting seminar for


issuers through "Comply or Explain", Diversity Action Committee and the Investor Relations Professional
a regulatory step forward towards BoardAgender initiative Association of Singapore

Value Creation & Sustainability


joining other leading exchanges in Singapore Corporate Awards (SCA) Audit Committee seminar co-hosted
participating in the Sustainable Stock with Accounting and Corporate
Exchanges initiative Regulatory Authority of Singapore
Provide issuers with a new and (ACRA)
updated guide for sustainability Roundtable discussion on
reporting, in replacement of the Sustainability Reporting
previous Guide to Sustainability public consultation
Reporting for Listed Companies Briefing for Directors of Listed
Provide investors with a tool to assess Companies on the proposed
sustainability practices of issuers sustainability reporting requirements
through the SGX Sustainability Indices

Governance
Summary of Stakeholder Interests
Interests raised by stakeholder Our response Read more in our:
The new sustainability reporting SGX plans to organise training for all listed companies to build Governance section of our Sustainability
rule would be a challenge for their reporting capability. Report: Targets and Performance
issuers to follow Scoreboard (page 39)
More time is needed to prepare SGX has agreed and announced an extension of reporting We will monitor the compliance by listed

Financials
a sustainability report for some timeline by giving listed companies up to 12 months from the end companies and report the progress in
issuers than the five months of the financial year to publish their first sustainability report. our Sustainability Report and Annual
proposed Report next year.
Others
38 Singapore Exchange

Sustainability

Process of Materiality Assessment

Identify Prioritise Validate


Our Sustainability Committee The relevance and significance Management, together
identified potential ESG risks and of each ESG factor to SGX's with the Sustainability
opportunities through stakeholder business were assessed. Issues of Committee, approved the
engagement and internal reviews. similar characteristics were material ESG factors.
clustered together for a more
accurate picture.

Our materiality definition is guided by the GRI reporting for SGX, with an additional non-material factor, energy,
framework, and is defined as reflecting the organisations selected for reporting. In particular, economic performance
significant economic, environmental and social impacts, and pertains to SGXs financial performance as a business.
substantively influencing the assessments and decisions of Socio-economic impacts refer to how SGX has affected the
stakeholders. At SGX, assessing materiality of ESG factors to economy and society through its role as a market operator and
our business and significant stakeholders is a continuous regulator. As a financial service organisation, our operations do
process. In FY2016, our Sustainability Committee updated our not have a significant energy footprint. However, the risks of
material ESG factors based on feedback garnered during our climate change to Singapore remain high, and we will continue
stakeholder engagement and internal reviews. A total of to report on our policies, practices and performance for
4 material ESG factors were identified to be most relevant managing our energy consumption.

Material ESG factors2


Material ESG factors Corresponding GRI aspects Read more in our:
Statements of Comprehensive Income in our
1 Economic performance Economic performance
Financial Statements (page 93)
2 Socio-economic impacts Indirect economic impacts Value Creation (pages 24 to 25)
3 Governance Governance
Ethics and Integrity Corporate Governance Report (pages 45 to 63);
Self-Regulatory Organisation Governance Report
Anti-corruption (pages 64 to 68)
Compliance
4 People Employment
Labour relations
Training and education People section of our Sustainability Report
Diversity and equal opportunity (pages 40 to 42)
Equal remuneration
Non-discrimination
Non-material ESG factor chosen for reporting Corresponding GRI aspect Read more in our:
5 Energy Energy Energy section of our Sustainability Report (pages 43 to 44)

2 The material ESG factors are not numbered according to order of importance.
Sustainability Annual Report 2016 39

Performance Overview
Governance

Group Overview
As Southeast Asias leading securities exchange, SGX plays a pivotal role in supporting regional economic growth. We therefore
create a transparent, fair, and sustainable marketplace to foster trust and confidence in our markets, by regulating and setting high
standards of corporate governance and business ethics for companies listed on our exchange. Most notably, the Singapore
Corporate Governance Framework has enabled Singapore to remain among the top 3 in corporate governance practices3. Further
information can be found in our Self-Regulatory Organisation Governance Report (pages 64 to 68).

At SGX, we lead by example, and are committed to ensuring adherence to the very same high standards of corporate governance
as we have mandated to our issuers. More details about SGXs corporate governance and Board can be found in the Corporate
Governance Report (pages 45 to 63).

Value Creation & Sustainability


Targets and Performance Scoreboard
Governance Targets for FY2016
Target Performance Update
Continue efforts to implement Comply Implemented Comply or Explain regime for sustainability reporting for SGX-listed companies
or Explain on Sustainability Reporting on 20 June 2016.
for SGX-listed companies Collaborating with Global Compact Network Singapore on consultant-led capability building
sessions for sustainability reporting, organised along industry groups for all listed companies.
Working with United Nations (UN) organisations, Principles for Responsible Investment
(PRI) and Sustainable Stock Exchanges (SSE) on their upcoming biennial global conference in
Singapore, to further raise awareness and promote improved ESG disclosures.

Governance
Publish anti-bribery and anti-corruption Published on SGXs website4
policy online

Governance Targets for FY2017


Target
Ensure smooth implementation of Comply or Explain regime for sustainability reporting

Sustainability Committee copy of the Code of Dealing and the SRO Conflicts Handbook.
SGX is dedicated to our sustainability goals and we seek to The SGX Conduct and Ethics Policy forms the foundation for the
ensure that our policies are well charted and adhered to. Our conduct expected of each employee in dealings with all SGX
Sustainability Committee, supported by the Sustainability matters. It provides guidance on appropriate conduct for some
working groups, tracks and sets directions for our sustainability common ethical issues, such as conflicts of interest, zero Financials
journey. The Committee is chaired by the Chief Financial Officer tolerance on bribery and corruption, confidential information,
and supported by the Head of Investor Relations as the compliance, among others. We also educate our employees on
secretary. Members of the Committee include the Chief our whistle-blowing policy, which is publicly posted on our
Executive Officer, Chief Regulatory Officer, Chief Risk Officer, website5, and which facilitates the reporting of suspected and
Head of Human Resources and Head of Communications. actual cases of improper, unethical or fraudulent conduct.

The Committee meets quarterly to plan and review the progress In FY2016, no whistle-blowing reports concerning SGX were
of our sustainability efforts. Where necessary, discussions are received. However, 4 cases relating to companies listed on the
escalated to senior management. SGX were filed through our whistle-blowing channel. These
Others

cases have been communicated to the Regulation department


Our Values and Ethics within SGX for investigation. There were no cases of bribery or
Ensuring that all employees comply with SGXs standards and corruption, anti-competitive behaviour and no fines for
expectations remains key to maintaining our high standards of non-compliance with the law during the year. We continue to
governance. We train all our new employees on the SGX strive to uphold the highest standards of corporate governance
Conduct and Ethics Policy as part of induction, and provide a with respect to our stringent governance framework.
3 Asian Development Banks ASEAN Corporate Governance Scorecard: Country Reports and Assessments 2014, published in 2016.
4 Details of the anti-bribery and anti-corruption policy are available at http://investorrelations.sgx.com/sustainability-report.cfm
5 Details of this policy are available at http://investorrelations.sgx.com/whistleblowing.cfm
40 Singapore Exchange

Sustainability

People
Talent Management

The exchange sector is a specialised industry relative to other financial services. Our business model and value creation process
requires talents and expertise which are not readily transferable from the wider financial services industry. We seek to attract and
retain the best staff through our talent strategy, the key elements of which include the following:

Promote diversity and inclusion within a non-discriminatory work environment


Regularly engage employees in various ways around strategy, business performance, community initiatives and commitment
to their overall welfare
Provide opportunities for employees to learn, develop and grow
Renew and develop current and future leadership for succession planning

Targets and Performance Scoreboard


Talent Management Targets for FY2016
Target Performance Update
Formalise SGXs talent strategy Overall talent strategy for SGX has been formulated, and various policies and practices
put in place on attracting, retaining and replacing talent while ensuring diversity and
inclusion in our workforce.
Publish HR policies online Work in progress.

Increase the hours of training per Work in progress.


employee per annum to 35
Conduct an employee The employee satisfaction survey was conducted in June 2016.
satisfaction survey

Talent Management Targets for FY2017


Target
Deploy programmes aimed at improving the engagement of our staff
Achieve 35 training hours per employee per year
Sustainability Annual Report 2016 41

Performance Overview
Diversity and Inclusion

Group Overview
SGX thrives on the diversity of our workforce. We work hard to discrimination policy6. As a result, we sustain our diverse mix of
ensure that all employees feel included regardless of their roles staff by gender, age and seniority. The new hires we welcomed
in SGX. We recognise that a diverse and inclusive workforce on board in FY20167 comprised an almost equal ratio of females
broadens our collective skills and perspectives as an and males, ranging across all age groups from below 30 to
organisation. This in turn drives growth and leverages SGXs above 50 years of age. The negligible gender pay gap, in
full potential. particular among our most senior positions, exemplifies gender
equality in our organisation.
In talent recruitment, we hire based on merit, and provide a
competitive and fair compensation and benefits package with In addition, we have had zero reported cases of grievances,

Value Creation & Sustainability


equal pay for equal work, engendered by our non- including any concerning discrimination, during the year.

Employee Employees by Age SGX Employees Gender Pay Gap


Gender Diversity (%) by Seniority (across employment categories)
(%) (%)
1
56 54 52 10 10 11 6 6 5
2
86 87 88
76 76 75 3

Governance
5

46 48 6
44
7

14 14 14 9
8 7 7
FY2014 FY2015 FY2016 FY2014 FY2015 FY2016 FY2014 FY2015 FY2016 15% 10% 5% 0% 5% 10% 15%
Male Female Over 50 Non-executive staff Male Female
Between 30 and 50 Executive staff Note: 1 to 9 are job grades (where 1 is most
Below 30 Management committee senior): a band on the right indicates males
are paid higher, while a band on the left

Financials
indicates females are paid higher.

New Hires by Gender New Hires by Age Voluntary Departure Voluntary Departure
(%) (%) by Gender by Age
(%) (%)
2
50 54 44 12 8 67 50 52 45 12 8 9
79 79 78
65 65

56 55
50 50 48
46
Others

31
23 23
13 13 13

FY2014 FY2015 FY2016 FY2014 FY2015 FY2016 FY2014 FY2015 FY2016 FY2014 FY2015 FY2016
Male Female Over 50 Male Female Over 50
Between 30 and 50 Between 30 and 50
Below 30 Below 30

6 Read more about how our Remuneration & Staff Development Committee determines the remuneration of our staff and the Board in our Corporate Governance Report (page 53).
7 Our rate of new hires was 17% in FY2016. This brings our total staff strength to 762, a 16% increase from FY2015. Apart from the new hires which were meant to support
business growth and strengthen operations, our FY2016 headcount also included our new subsidiary Energy Market Company (EMC), following the acquisition in FY2015.
42 Singapore Exchange

Sustainability

We foster an inclusive work environment centred on regular employee engagement. We ensure


that our peoples diverse views and needs are heard and addressed. Apart from running speaker Employees Returning
series and brown bag lunch talks where managers connect with employees in more intimate
to Work after Parental
Leave (%)
settings, we also promote diverse activities in which employees can get involved in making
contributions to the wellbeing of the organisation and the wider community. These include family 100
94
oriented events, internal reward events, as well as community initiatives such as the annual
SGX Bull Charge. Such activities allow our employees to connect more deeply with SGX as a
company and through that develop stronger organisational identity. Our consistently low attrition
rates year on year (11% in FY2016, below the average labour turnover rate of 22.8% in Singapore8)
bears testimony to our overall talent management practices.

Support for Parents and Families


SGX understands how important family is to our employees. We support our employees in
balancing their professional life with domestic responsibilities, by providing them parental leave in Male Female
line with statutory requirements, as well as flexible working schemes for female staff after
childbirth. Our family-friendly policies and practices saw 30 male and 38 female employees who
had taken parental leave during the year, return to work.

Training and Development


SGX believes strongly in the continuing training and development of our people. We subscribe
to the policy of lifelong learning, to encourage our employees to explore and unlock their full Average Training per
potential, while equipping them with transferrable skills and knowledge that go beyond the Employee
(hours per year)
required expertise of their current roles. To achieve this, we provide employees with a variety
of training, professional memberships, continuing education scheme, study leave, and internal job 34 359
rotation opportunities. All employees are also given regular performance reviews and target 29
setting sessions at least once a year with their managers.

We focus on leadership renewal and development to shore up our current capabilities while
developing our bench strength for future needs. Every year as part of our future leadership
pipeline, we recruit new graduates into the Management Associate programme, where they
undergo two rigorous years of job rotations and career development. We specifically monitor
competency requirements for strategically critical roles, and maintain a line of sight for
high-potential internal candidates, proactively providing them with development opportunities FY2014 FY2015 FY2016
to raise their level of readiness.

8 Ministry of Manpower: Labour Market Statistical Information, based on an average monthly resignation rate of 1.9% in 2015.
9 A restatement has been made on the FY2015 average training hours per employee to better reflect the full year performance. The figure disclosed in prior year was based on an
annualisation of 11 months performance.
Sustainability Annual Report 2016 43

Performance Overview
Energy

Group Overview
SGX is committed to reducing its impacts on the environment. Singapore, a small island
Key Elements of
state, is particularly vulnerable to rising sea levels caused by global warming and
Our Environmental Policy
climate change. SGX is focused on minimising its energy footprint and related carbon
emissions while concurrently balancing our commercial needs. Managing our direct impacts
Minimise the use of electricity,
In FY2016, there was an overall increase by 12% in electrical consumption at our water and paper
offices10 due to the inclusion of our subsidiary Energy Market Company (EMC). Reduce environmental impact by
Excluding EMC, the electrical consumption at SGX offices remained largely unchanged reducing non-essential travel
from FY2015, despite a headcount increase. This led to a marginal decrease in energy Comply with all relevant

Value Creation & Sustainability


intensity per employee. environmental legislation in all
countries in which we operate
In FY2016, SGX formalised its environmental policy, which covers both our direct and
Managing our indirect impacts
indirect impacts on energy usage and other natural resources. In the second half of Raise awareness of environmental
FY2016, we also implemented the following initiatives to reduce our energy consumption:
issues among employees
Carry out purchasing activities
Reduced the operating hours of:
and interactions with our
1) Lighting in office areas and TV displays
vendors in an environmentally
2) Ticker tapes at Central Depository (CDP) and SGX Centre
responsible manner
3) Media wall at SGX Centre

Governance
Raised the office temperature setting to reduce air-conditioning energy
consumption
Raised awareness among our employees on good environmental practices

All these initiatives are expected to result in energy savings of approximately


6,500 kWh/month from FY2017.

We will continue to measure our progress against our targets, and drive improvements
for environmentally-friendly resource usage.

Financials
Others

10 We have excluded the energy consumption of our data centres as they are managed by third parties.
44 Singapore Exchange

Sustainability

Targets and Performance Scoreboard


Energy Targets for FY2016
Target Performance Update
Review options for an energy audit Conducted an evaluation and proposed not to proceed with the energy audit, as energy usage
of SGX offices is not a significant factor in SGXs business model.
Reduce consumption (on 2015 baseline) Consumption of electricity in our offices increased by 12% due to inclusion of EMC. Excluding
of electricity by 5% EMC, the electrical consumption at SGX offices remained largely unchanged from FY2015,
despite a headcount increase. This led to a marginal decrease in energy intensity per employee.
Develop and publish Published on SGXs website11
an environmental policy

Energy Targets for FY2017


Target
Undertake further initiatives to promote environmental responsibility
Analyse and monitor energy usage

Energy Consumption Energy Intensity


in Offices in Offices
(GWh) (kWh/employee)

2,803 2,706
0.2 2,631
1.8 1.8
1.7

FY2014 FY2015 FY2016 FY2014 FY2015 FY2016


SGX Offices EMC Office

GRI G4 Content Index Comprehensive


Conformance of this sustainability report to the GRI G4 Comprehensive reporting requirements can be found online at
http://investorrelations.sgx.com/sustainability-report.cfm

11 Details of the environmental policy are available at http://investorrelations.sgx.com/sustainability-report.cfm


Annual Report 2016 45

Corporate

Performance Overview
Governance
Report

Corporate Governance (Corporate Governance of Approved be read in conjunction with the

Group Overview
Singapore Exchange (SGX) is fully Exchanges, Approved Clearing Houses Self-Regulatory Organisation (SRO)
committed to upholding the highest and Approved Holding Companies) Governance Report, which sets out
standards of corporate governance, Regulations 2005 (SFR 2005). Unless SGXs corporate governance as a
business integrity and professionalism in otherwise stated, these practices were in self-regulatory organisation. Unless
all activities in the Group. This report sets place for the entire financial year. specified otherwise, references to
out SGXs key corporate governance independence of directors are as defined
practices with reference to the Code of Self-Regulatory under the SFR 2005.
Corporate Governance 2012 (CCG 2012), Organisation Governance
as well as the Securities and Futures This Corporate Governance Report is to

Value Creation & Sustainability


SGX Corporate Governance Framework

shareholders Regulators

board of directors

External Nominating & Regulatory Remuneration Risk


Audit & Staff
& Internal Governance Conflicts Management

Governance
Committee Development
Auditors Committee Committee Committee
Committee

Legal, Compliance &


ceo
Corporate Secretariat

Executive management
committee

SGX

Financials

Highlights
Awards & Accolades Transparency Strong Risk Board Succession
Ranked 3 in Singapore for the ASEAN
rd
Daily updates on SGXs Management Planning
Corporate Governance Scorecard 2015. website of volumes and Board-endorsed risk Board renewal &
Ranked 2 for the Governance &
nd values of securities and appetite statement, refreshment:
Transparency Index 2015. derivatives traded or driving balanced Appointment of
cleared by SGX. approach to strategy Ms Lim Sok Hui
Others

Ranked 3rd for the Singapore


Monthly publications on development, within (Mrs Chng Sok Hui)
Governance & Transparency Index 2016.
volumes and values of defined risk boundaries. on 1 December 2015
Runner up for the Most Transparent as a non-independent
key products traded. Please refer to section
Company Award (Finance) in the SIAS director and member of
Quarterly financial on Risk Management
2015 Investors Choice Awards. the Risk Management
reports. Report.
Named Exchange of the Year at Committee.
the global Energy Risk Awards 2016, Quarterly briefings to
becoming the first Asian exchange to analysts and media
receive the title. webcasts.
46 Singapore Exchange

Corporate
Governance
Report

Board Matters Independent Judgement Please refer to the Principles in this


The Boards Conduct of Its Affairs All directors exercise due diligence and Corporate Governance Report, for
Principle 1 independent judgement and make further information on the activities
decisions objectively in the best interests of the NGC, RSDC, RMC and AC.
Principal Duties of the Board of SGX. SGX adheres to the
The Board oversees the conduct of the requirements under SFR 2005. In Key Features of Board Processes
SGX Groups affairs and is accountable determining the independence of its The Board meets regularly and sets aside
to shareholders for the long-term directors, please refer to Board time at each scheduled meeting to meet
performance and financial soundness Independence under Principle 2 in this without the presence of Management.
of the Group. Corporate Governance Report. Board meetings may include
presentations by senior executives
In addition to its statutory duties, the Delegation by the Board and/or external consultants/experts on
Board reserves the following key matters Board committees, namely the Audit strategic issues, the developing business
for its decision: Committee (AC), Nominating & and regulatory landscape or risk
Governance Committee (NGC), management issues.
the appointment of the Chief Regulatory Conflicts Committee (RCC),
Executive Officer (CEO) and directors, Remuneration & Staff Development The schedule of all Board and Board
appointments on Board committees Committee (RSDC) and Risk Management committee meetings and the Annual
and Board succession; Committee (RMC), have been constituted General Meeting (AGM) for the next three (3)
the appointment of key management to assist the Board in the discharge of calendar years is planned in advance, in
personnel and succession planning as specific responsibilities. Clear terms of consultation with the Board. The Board
an ongoing process; reference (TOR) set out the duties, meets at least four (4) times a year at
approving broad policies, strategies authority and accountabilities of each regular intervals. Besides the scheduled
and objectives. The Board provides committee as well as qualifications for Board meetings, the Board meets on an
guidance and leadership to committee membership, in line with the ad-hoc basis as warranted by particular
management and ensures that CCG 2012 and SFR 2005, where circumstances. Attendance by telephone
adequate resources are available to applicable. The TORs are reviewed on a and video conference at Board meetings
meet its objectives; regular basis, along with the committee is allowed under the SGXs Articles of
annual budgets, major funding structures and membership, to ensure Association (Articles). The Board and
proposals, investment and their continued relevance. The detailed Board committees may also make
divestment proposals; TORs of the Board committees are decisions by way of circulating
the adequacy of internal controls, risk available on SGXs website. resolutions. There were six (6) scheduled
management, financial reporting and Board meetings and one (1) ad-hoc
compliance; Board meeting in FY2016. Key matters
assessment of management discussed at these meetings included
performance;
AC financial performance, annual budget,
manage and/or mitigate actual or corporate and risk strategy, business
perceived conflicts of interest RMC NGC plans, regulation, significant operational
between SGXs regulatory matters, capital-related matters and
board
accountabilities and commercial organic and inorganic strategic
interests; opportunities. In the interest of allocating
the sustainability of SGXs policies more time for the Board to deliberate on
and proposals; and RSDC RCC issues of a strategic nature, and to focus
corporate governance responsibilities. on particular themes for each Board
meeting, submissions which are
The RCC has been appointed by the straightforward in content as well as
Board to supervise the management of those that are for information only, will
SGXs SRO conflicts. The activities of the be compiled and circulated in between
RCC are outlined in the SRO Governance Board meetings. The Board holds an
Report in this Annual Report. annual off-site strategy meeting to
interact with senior management and
Corporate Governance Report Annual Report 2016 47

Performance Overview
have in-depth discussions on SGXs strategic direction. The last A record of the Directors attendance at Board meetings during

Group Overview
annual off-site strategy meeting was held on 20 January 2016. the financial year ended 30 June 2016 is set out in the table below.

Directors Details Directors Independence Status Directors Meeting Attendance Report


ASSESSMENT OF INDEPENDENCE OF INDIVIDUAL DIRECTORS : Chair of the committee
Names All references to Regulations are a reference to the SFR 2005,
: Member of the committee
Non-Independent (NI)

which can be obtained from www.agc.gov.sg


Non-Executive (NE)

: By Invitation
Independent (I)/

All references to Guidelines are references to the CCG 2012,


Executive (E)/

which can be obtained from www.mas.gov.sg


Reg 3(1)(a) Reg 3(1)(b) Reg 4 AGM Board AC NGC RCC RSDC RMC
Independent Independent Independent
Independence Independence from from from
No. of meeting held in FY2016
status under status under management business substantial

Value Creation & Sustainability


the CCG 2012 the SFR 2005 relationship relationship shareholder 1 7 4 2 2 3 4

Mr Chew Choon Seng NI NE No 1


Yes Yes Yes Yes
1/1 7/7 4/4 2/2 2/2 3/3 4/4
Mr Loh Boon Chye NI E No2 No3 No Yes Yes
1/1 7/7 4/4 2/2 2/2 2/2 4/4
Mr Thaddeus Beczak I NE Yes Yes Yes Yes Yes
1/1 7/7 2/2 4/4
Ms Chew Gek Khim I NE Yes Yes Yes Yes Yes
1/1 7/7 2/2 4/4
Ms Jane Diplock AO I NE Yes Yes Yes Yes Yes

Governance
1/1 7/7 4/4 2/2 4/4

Mr Kwa Chong Seng Lead NE Yes Yes Yes Yes Yes Lead
ID 1/1 ID 2/2 3/3
6/7
Mr Kevin Kwok I NE Yes Yes Yes Yes Yes
1/1 7/7 4/4 2/2 4/4
Mr Lee Hsien Yang NI NE No1 Yes Yes Yes Yes
1/1 5/7 3/4
Mr Liew Mun Leong I NE Yes Yes Yes Yes Yes
1/1 6/7 4/4 1/2 3/3
Ms Lim Sok Hui NI NE Yes No4 Yes No4 Yes Financials
(Mrs Chng Sok Hui) 4/4 2/2
Mr Ng Kok Song I NE Yes Yes Yes Yes Yes
1/1 7/7 1/2 3/3
Mr Quah Wee Ghee NI NE Yes No5 Yes No Yes
1/1 2/2 1/1
1 Messrs Chew Choon Seng and Lee Hsien Yang are deemed non-independent, solely on account of each having completed nine consecutive years of service, as at the dates
of their first appointments pursuant to the NGCs decision on Guideline 2.4 of the CCG 2012.
2 As CEO of SGX, Mr Loh Boon Chye is considered employed by SGX and deemed non-independent by virtue of Guideline 2.3(a) of the CCG 2012.
3 As CEO of SGX, Mr Loh Boon Chye is considered employed by SGX and deemed non-independent by virtue of Regulation 3(1)(a) of the SFR 2005.
4 As chief financial officer of DBS Bank Limited (DBS Ltd) and on account that DBS Ltd is a trading member of SGX-DC (OTCF) and DBS Vickers Securities (Singapore) Pte Ltd is
Others

a trading and clearing member of SGX-ST, CDP, SGX-DT and SGX-DC, Ms Lim Sok Hui is deemed non-independent by virtue of Regulation 3(3)(d) of the SFR 2005.
5 Mr Quah Wee Ghee was deemed non-independent by virtue of Regulation 3(3)(c)(ii) of the SFR 2005, due to his directorship held with OCBC Ltd, which is a related corporation
of an SGX member firm. Mr Quah stepped down from the Board at the last AGM held on 23 September 2015.
48 Singapore Exchange

Corporate
Governance
Report

Board Approval SGX conducts a comprehensive The directors also attend other
SGX has documented internal guidelines orientation programme to familiarise appropriate courses, conferences and
for matters that require Board approval. new directors with its business and seminars. These include programmes run
Matters which are specifically reserved governance practices. The orientation by the Singapore Institute of Directors,
for Board approval are: programmes are conducted by the CEO of which SGX is a corporate member.
matters involving a conflict of and senior management and provide
interest for a substantial shareholder directors an understanding of SGXs Directors can request for further
or a director; businesses, operations and regulatory information on any aspect of SGXs
material acquisition and disposal environment, to enable them to operations or business from
of assets; assimilate into their new roles. The management.
corporate or financial restructuring; programmes also allow the new director
share issuances, interim dividends to get acquainted with senior Board Composition and Guidance
and other returns to shareholders; management, thereby facilitating board Principle 2
matters which require Board interaction and independent access to
approval as specified under SGXs senior management. Board Independence
interested person transaction policy; The SFR 2005 provides that an
and The directors are provided with briefings independent director is one who is
any investments or expenditures and updates on an ongoing basis in areas independent from any management and
exceeding S$10 million in total. such as directors duties and business relationship with SGX and
responsibilities, corporate governance, independent from any substantial
For expenditures of S$10 million and changes in financial reporting standards shareholder of SGX. Under this definition,
below, SGX has internal guidelines which and issues which have a direct impact on more than half of the Board is considered
set out, the authorisation limits granted financial statements, so as to enable independent.
to management for approval of capital them to properly discharge their duties
and operating expenditures, specified and responsibilities as Board members or The Board, taking into account the views
financial transactions and Board committee members. The scope of of the NGC, the nature and scope of
supplementary budgets. such briefings and updates includes SGXs businesses and the number of
industry trends and developments, Board committees, considers that a
While matters relating to SGXs governance practices, and changes in board with a majority of members being
objectives, strategies and policies regulatory requirements pertaining to independent is necessary.
require the Boards direction and SGXs business.
approval, the Executive Management Over the course of the year, the NGC
Committee (EMCO) comprising senior Briefings and Updates Provided assessed the independence of Board
management is responsible for for Directors in FY2016 members in compliance with the
overseeing the management of the The external auditor, requirements of the SFR 2005 and took
SGX Group and implementing the PricewaterhouseCoopers LLP (PwC), into consideration the relevant guidelines
Board approved strategic policies. regularly briefs AC members on of the CCG 2012. With regard to Guideline
developments in accounting and 2.4 of the CCG 2012 which requires that
Board Orientation and Training governance standards. the independence of any director, who
A formal letter of appointment is provided The CEO updates the Board at each has served on the Board beyond nine
to every new director. The formal letter of meeting on business and strategic years from the date of first appointment
appointment indicates the time developments in the global exchange be subject to particularly rigorous
commitment required and the directors and clearing house industry. review, the NGC decided that any
role and responsibilities. The new director The Board and EMCO members were independent director upon completing
will also receive a manual containing Board briefed on the key trends pertaining nine consecutive years of service will
and SGX policies relating to the disclosure to cyber security. thereafter be deemed a non-independent
of interests in securities, disclosure of The Board and EMCO members met director, notwithstanding demonstrable
conflicts of interest in transactions in an annual off-site strategy meeting independence of management, or
involving SGX, restrictions on dealings in for in-depth discussion on the business relationships with SGX or any
SGXs securities and the disclosure of strategic issues and direction of SGX. substantial shareholder. The Board is in
price-sensitive information. accord with the NGCs decision.
Corporate Governance Report Annual Report 2016 49

Performance Overview
Consequently, Messrs Lee Hsien Yang Board Guidance is unable to attend a Board or Board

Group Overview
and Chew Choon Seng were deemed An effective and robust Board, whose committee meeting, the director may
non-independent, solely on account of members engage in open and nevertheless provide his/her comments
each of them having completed nine constructive debate and challenge to the Chairman or relevant Board
consecutive years of service from the management on its assumptions and committee Chairman separately.
dates of their first appointments. proposals, is fundamental to good
corporate governance. A Board should Meeting of Directors
Mr Lee, who has served for more than also aid in the development of strategic without Management
eleven years on the Board, is retiring at proposals and oversee effective Executive sessions are available for the
SGXs next AGM in September 2016. implementation by management to NEDs to meet without the presence of
achieve set objectives. management or executive directors at

Value Creation & Sustainability


Board Composition and Size each Board meeting, where necessary.
Each year, the NGC reviews the For this to happen, the Board, in
composition and size of the Board and particular its Non-Executive Directors Chairman and
each Board committee and the skills and (NEDs), must be kept well informed of Chief Executive Officer
core competencies of its members to SGXs businesses and be knowledgeable Principle 3
ensure an appropriate balance and about the exchange industry. To ensure
diversity of skills and experience. Core that NEDs are well supported by Separation of the Role of Chairman
competencies include banking, finance, accurate, complete and timely and the Chief Executive Officer (CEO)
accounting, business acumen, information, NEDs have unrestricted The roles of Chairman of the Board and
management experience, exchange access to management. NEDs also CEO are separate to ensure a clear

Governance
industry knowledge, familiarity with receive periodic information papers and division of responsibilities, increased
regulatory requirements and knowledge board briefings on the latest market accountability and greater capacity
of risk management. The NGC also takes developments and trends, and key of the Board for independent decision-
into account gender diversity in relation business initiatives. Regular informal making. The Chairman and the CEO are
to the composition of the Board. Out of meetings are held for management to not related. The division of
11 directors, 3 are female. The Board, brief directors on prospective deals and responsibilities and functions between
taking into account the views of the NGC, potential developments in the early the two has been demarcated with the
considers that its directors possess the stages, before formal Board approval is concurrence of the Board.
necessary competencies and knowledge sought. Board papers are provided to
to lead and govern SGX effectively. directors not less than a week in advance The Chairman manages the business of
of the meeting to afford the directors the Board and monitors the translation
sufficient time to review the board of the Boards decisions and directions Financials
papers prior to the meeting. If a director into executive action. He approves the
agendas for the Board meetings and
Board Independence (as at 30 June 2016)
ensures sufficient allocation of time for
Non-indpendent thorough discussion of each agenda item.
executive Directors 1 A
risk He promotes an open environment for
Independent
Non-executive
management debate, and ensures that NEDs are able
FY2016 Directors 6 strategies
to speak freely and contribute
Non-independent effectively. He exercises control over the
Non-executive The four (4)
Directors 4 regular Board B quality and quantity of the information
Others

D sessions in strategic issues


end-of-financial a year are as well as the timeliness of the flow of
and directions
period review organised to information between the Board and
for SGX
Gender Diversity (as at 30 June 2016) focus on: management. In addition, he provides
close oversight, guidance, advice and
C
budget leadership to the CEO and management.
considerations
Female Directors 3 for the financial
FY2016 Male Directors 8 year At AGMs and other shareholders
meetings, the Chairman plays a pivotal
role in fostering constructive dialogue
50 Singapore Exchange

Corporate
Governance
Report

between shareholders, the Board Based on the NGCs assessment of the Nomination and Selection of Directors
and management. independence of each individual director SGX adopts a comprehensive and
and his or her relevant expertise, and detailed process in the selection of new
The CEO manages and develops the with the aim of ensuring compliance with directors. The NGC is responsible for
businesses of SGX and implements the the requirements of the CCG 2012 and identifying candidates and reviewing
Boards decisions. He chairs the EMCO, SFR 2005, the Board reviews, and all nominations for the appointment,
which comprises senior management reconstitutes as appropriate, the re-appointment or termination of
executives. EMCO meets weekly to membership of the Board committees. directors and Board committee
oversee the management of the SGX members, taking into account the
group and implement the Boards The Articles provide that at each AGM, Monetary Authority of Singapores
strategic policies. one-third of the directors, including the (MAS) fit and proper criteria for such
CEO who also serves on the Board (or, if appointments, the directors
Board interaction with, and independent their number is not a multiple of three, independence status, his or her
access to, senior management is the number nearest to but not less than participation and contributions during
encouraged. EMCO members are invited one-third) shall retire from office by and outside board meetings and other
to attend all Board meetings, and rotation. Effectively, this results in all relevant factors as may be determined
relevant Board committee meetings. directors having to retire at least once by the NGC. Where the need to appoint
every three years or even earlier. a new Director arises, the NGC will
Lead Independent Director Directors appointed by the Board during review the composition and range of
Mr Kwa Chong Seng, chairman of the the financial year, to fill a casual vacancy expertise, skills and attributes of the
NGC and RSDC, was appointed as Lead or appointed as an additional Director, Board and Board committees. The NGC
Independent Director (LID) on 1 December may only hold office until the next AGM identifies SGXs needs and prepares a
2013 to lead and co-ordinate the activities and thereafter be eligible for re-election shortlist of candidates with the
of the NEDs of SGX. The charter of the by shareholders at the next AGM. appropriate profile for nomination
LID is available on SGXs website. Shareholders will be provided with before sourcing for candidates through
relevant information on the candidates an extensive network of contacts.
The LID has the authority to call and lead for election or re-election. Candidates are identified based on the
meetings of the independent directors, needs of SGX and the relevant expertise
when necessary and appropriate, and to NGC Composition required. After the NGC Chairman, the
preside at all meetings of the Board at The NGC comprises five (5) directors Chairman of the Board and the other
which the Chairman is not present or has namely: NGC members have interviewed the
to recuse himself, including closed Mr Kwa Chong Seng candidates, the candidates are
sessions of the NEDs. The LID shall Committee chairman and independent shortlisted for the NGCs formal
represent the independent directors in non-executive Director consideration for appointment to
responding to shareholders questions Mr Chew Choon Seng the Board.
and comments that are directed to the Non-independent non-executive Director
independent directors as a group. Ms Chew Gek Khim When reviewing a nomination
Independent non-executive Director for a proposed Board appointment,
Board Membership Mr Liew Mun Leong the NGC complies with SFR 2005 criteria
Principle 4 Independent non-executive Director as follows:-
Mr Ng Kok Song a determination of the candidates
Continuous Board Renewal Independent non-executive Director independence;
The Board, in conjunction with the NGC, whether his/her appointment will
reviews the composition of the Board The NGC is responsible for SGXs result in non-compliance with any
and Board committees annually, taking corporate governance framework, of the SFR 2005 composition
into account the performance and the Boards succession plan and requirements for the Board and its
contribution of each individual director. reviewing relevant local and Board committees; and
Board composition is also evaluated to international developments in the area whether the candidate fulfils the fit
ensure that diversity of skills and of corporate governance (including and proper criteria under the MAS fit
experience is maintained within the changes in applicable laws, regulations and proper guidelines which include,
Board and Board committees. and listing rules). honesty, integrity, reputation,
Corporate Governance Report Annual Report 2016 51

Performance Overview
competence and capability, and The NGC is of the view that the progressively and in an orderly manner,

Group Overview
financial soundness. effectiveness of each of the directors is to avoid losing institutional memory.
best assessed by a qualitative
All directors of SGX are approved by the assessment of the directors Key Information on Directors
MAS, based on its fit and proper criteria, contributions as well as by taking into The profile of the directors and key
before they are appointed by the Board account each directors listed company information are set out under Board of
or at the AGM (as the case may be). board directorships, and any other Directors section in this Annual Report.
relevant time commitments. While The Notice of AGM sets out the directors
Continuous Review having a numerical limit on the number proposed for re-election or re-appointment
of Directors Independence of directorships may be considered by at the AGM. Key information on directors
The NGC conducts an annual review some other companies to be suitable is also available on SGXs website.

Value Creation & Sustainability


of each directors independence in for their circumstances, at present SGX
accordance with the SFR 2005 considers the assessment as described Board Performance
requirements and takes into consideration above to be more effective for its Principle 5
the relevant guidelines in the CCG 2012. purposes. SGX also does not wish to
SGX has procedures in place to ensure omit from consideration outstanding Board Evaluation Policy
continuous monitoring of SGX directors individuals who, despite the demands The Board has implemented a process
independence. The NGC has ascertained on their time, have the capacity to carried out by the NGC, for assessing the
that a majority of the Board members participate and contribute as new effectiveness of the Board as a whole
are independent according to these members of the Board. and its Board committees, and for
criteria. If at any time the MAS is not assessing the contribution by each

Governance
satisfied that a director is independent, For now, the NGC believes that individual director to the effectiveness
notwithstanding any determination by SGXs qualitative assessment and the of the Board. The Board Evaluation Policy
the NGC, MAS may direct SGX to rectify existing practice, which requires each is available on SGXs website.
the composition of the Board or Board director to confirm annually to the NGC,
committees (as the case may be). his/her ability to devote sufficient time Board Evaluation Process
and attention to SGXs affairs, having The NGC undertakes a process to
SGX has in place a policy whereby regard to his/her other commitments, assess the effectiveness of the Board
directors must consult both the are effective. as a whole and its Board committees
Chairman of the Board and the NGC annually. The NGC will ascertain key
Chairman prior to accepting new director SGX will continue to disclose each areas for improvement and requisite
appointments. Directors must also directors listed company board follow-up actions;
immediately report any changes in their directorships and principal commitments Once every two (2) years, Financials
external appointments, including any which may be found in the Board of independent consultants will be
corporate developments relating to their Directors section in the Annual Report. appointed to assist in the evaluation
external appointments, which may affect process of the Board and its Board
their independence. This ensures The Board is satisfied that all directors committees. This process includes
directors continually meet the stringent have discharged their duties adequately a questionnaire designed to assess
requirements of independence under the for FY2016. The Board also expects that the performance of the Board and
SFR 2005. the directors (including any directors its Board committees and enhance
who are newly appointed) will continue the overall effectiveness of
Directors Time Commitments to (or will) discharge their duties directors; and
Others

The NGC assesses the effectiveness adequately in FY2017. The Board and its Board committees
of the Board as a whole and takes into performance will be evaluated by each
account, each directors contribution and Alternate Directors director and each EMCO member.
devotion of time and attention to SGX. SGX has no alternate directors on its Board.
The NGC also assesses nominees The Board believes that the use of an
identified for recommendation to the Succession Planning for the Board external independent consultant greatly
Board, on their individual credentials and Succession planning is an important part enhances the quality and objectivity of
their ability to devote appropriate time of the governance process. The NGC will the evaluation.
and attention to SGX. seek to refresh the Board membership
52 Singapore Exchange

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During FY2016, an external independent Individual Director Evaluation papers, and directors are provided with
consultant was appointed to facilitate the There is an individual assessment of each tablet devices to enable them to access
evaluation of the Board and its Board NEDs contribution by the Chairman and read Board and Board committee
committees. Factors which were evaluated of the Board, and the results of the papers prior to and at meetings.
included Board composition, information assessment are discussed with the NGC
management, Board processes, corporate Chairman. The factors considered in the Managements proposals to the Board
integrity and social responsibility, individual review include directors for approval provide background and
management of the Companys attendance and participation in and explanatory information such as facts,
performance, Board committee outside meetings, the quality of resources needed, risk analysis and
effectiveness, CEO performance and directors interventions and special skills mitigation strategies, financial impact,
succession planning, Director development and contributions made by directors. expected outcomes, conclusions and
and management, risk management and recommendations. Any material variance
overall perception of the Board. Senior The performance of individual between any projections and the actual
management was also requested to directors is taken into account in their results of budgets is disclosed and
complete appraisal forms assessing the re-appointment or re-election. Specific explained to the Board. Employees
Boards performance in areas of needs which arise from time to time are who can provide additional insight
developing and monitoring strategy, taken into account in any appointment of into matters to be discussed, will be
working with management, managing new directors. present at the relevant time during the
risks and overall perception of the Board. Board and Board committee meetings.
The external independent consultant had The assessment of CEOs performance is
no connection with SGX or the Board. The undertaken by the Chairman, together To facilitate direct and independent
findings from this evaluation were with the NGC Chairman and the RSDC access to the senior management,
presented to the Board to facilitate Chairman, and the results are reviewed directors are also provided with the
improvements to the Boards practices. by the Board. The NEDs, led by the NGC names and contact details of the
Chairman, assess the performance of the management team. Draft agendas for
Board Performance Criteria Chairman of the Board, and the NGC Board and Board committee meetings
The Board reviews its performance Chairman provides the feedback to the are circulated to EMCO and Chairmen of
against qualitative and quantitative Chairman of the Board. the Board and Board committees, in
targets annually. advance, for them to suggest items for
Access To Information the agenda and/or review the usefulness
The Board is required to ensure that a Principle 6 of the items in the proposed agenda.
proper balance is maintained between its
commercial objectives and its regulatory Complete, Adequate and For the AC and the RMC to liaise closely
responsibilities. Therefore, the Board Timely Information and have a clear understanding of each
performance criteria include a measure Management recognises that the others work and plan their work on the
to capture the performance of SGXs flow of complete, adequate and timely same risk framework, finalised minutes
regulatory responsibilities as a SRO. information on an ongoing basis to the of the respective committees are
Board is essential to the Boards effective promptly circulated to the other
In line with the CCG 2012s and efficient discharge of its duties. To committee. Arrangements are also in
recommendation of using quantitative allow directors sufficient time to prepare place for the AC and the RMC to share
financial indicators, the Board has for the meetings, all scheduled Board and information on a regular basis, which
adopted performance measures which Board committee papers are distributed includes having common directors on the
align its interests with shareholders to directors not less than a week in AC and the RMC, and the Head, Internal
interests, such as (a) Return on Equity, advance of the meeting. This enables the Audit and Chief Risk Officer attending
(b) absolute minimum SGX Total discussion during the meeting to focus on both the AC and the RMC meetings.
Shareholder Return (TSR), and (c) SGXs questions that directors may have. Any These measures are in line with the
TSR performance against the TSR of the additional material or information recommendations of the Guidebook for
FTSE/MV Exchanges Index, which is an requested by the directors is promptly Audit Committees in Singapore.
index of 28 listed exchanges, in order to furnished. As part of its sustainability
benchmark its relative performance efforts, SGX has done away with hard In order to keep directors abreast
against other exchanges. copy Board and Board committee of sell-side analysts views on SGXs
Corporate Governance Report Annual Report 2016 53

Performance Overview
performance, the Board is updated for managements compliance with the members of the RSDC collectively have

Group Overview
annually on the market view which Listing Rules, including training and strong management experience and
includes a summary of analysts feedback advising management to ensure that expertise on remuneration issues.
and recommendations following the material information is disclosed on a
full-year and half-year results. A monthly prompt basis. The Company Secretary The key responsibilities of the RSDC,
financial performance report is also attends and prepares minutes for all as delegated by the Board, are to oversee
provided to the Board. This report Board meetings. As secretary to all the the governance of the Groups
includes the financial and management other Board committees, the Company remuneration policy, oversee the
accounts, accompanied by an analysis Secretary assists to ensure coordination remuneration of the Board and key
of SGXs performance and supporting and liaison between the Board, the Board executives including reviewing the
data. It also contains operational metrics, committees and management. The remuneration of the CEO, set appropriate

Value Creation & Sustainability


audit findings, and a risk dashboard Company Secretary assists the Chairman, remuneration frameworks and policies,
which provides an overview of SGXs the Chairman of each Board committee including long-term incentive schemes,
key risks. These risks include clearing and management in the development of to deliver annual and long-term
and settlement risks, regulatory and the agendas for the various Board and performance of the SGX Group and to
compliance risks, technology and Board committee meetings. review the development and succession
operations service availability, and plan for EMCO members.
other strategic risks. The appointment and the removal of the
Company Secretary are subject to the The RSDC reviews and recommends to
The quarterly and year-end financial Boards approval. the Board, the specific remuneration
statements are reviewed and package for the CEO upon recruitment
Independent Professional Advice

Governance
recommended by the AC to the or renewal (where applicable).
Board for approval. Directors, either individually or as a Subsequently, annual increments,
group, in the furtherance of their duties, variable bonuses, long-term incentive
Company Secretary may take independent professional awards and other incentive awards or
Directors have separate and independent advice, if necessary, at SGXs expense. benefits-in-kind, will be reviewed by the
access to the Company Secretary. The RSDC against the achievement of
Company Secretary is responsible for, Remuneration Matters prescribed goals and targets for the
among other things, ensuring that Board Procedures for Developing CEO and key management personnel,
procedures are observed and that the Remuneration Policies for recommendation to the Board.
SGXs Memorandum and Articles of Principle 7
Association, relevant rules and The RSDC also reviews the Companys
regulations, including requirements of RSDC Composition obligations arising in the event of Financials
the Securities and Futures Act (SFA), The RSDC comprises four (4) directors termination of the CEOs and key
Companies Act and Listing Manual, are namely: management personnels contracts
complied with. The Company Secretary Mr Kwa Chong Seng of service, to ensure that such contracts
also assists the Chairman and the Board Committee chairman and independent of service contain fair and reasonable
to implement and strengthen corporate non-executive Director termination clauses which are not
governance practices and processes, Mr Chew Choon Seng overly generous.
with a view to enhancing long-term Non-independent non-executive Director
shareholder value. Mr Liew Mun Leong The RSDC approves the framework of
Independent non-executive Director remuneration for the entire organisation
Others

The Company Secretary assists the Mr Ng Kok Song including the structure of short-term and
Chairman to ensure good information Independent non-executive Director long-term incentive schemes and policies.
flows within the Board and its Board Each year, the RSDC also approves the
committees and between senior The Board considers that Mr Kwa salary increment pool and total incentive
management and NEDs, as well as Chong Seng, who has many years pool for distribution to staff of all grades.
facilitating orientation and assisting with of experience in senior management
professional development as required. positions and on various boards dealing The RSDC has access to the Head of
The Company Secretary is responsible for with remuneration issues, is well Human Resources, who attends all RSDC
designing and implementing a framework qualified to chair the RSDC and that the meetings. The RSDC may also seek
54 Singapore Exchange

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Governance
Report

external expert advice on remuneration those of shareholders and link rewards to The fees paid to the SGX Chairman have
of directors and staff. corporate and individual performance. remained unchanged since FY2010.
As a policy, up to half of the senior
The RSDC reviews the succession and managements variable compensation The RSDC recommends the
leadership development plans for senior may be deferred in the form of long-term non-executive directors fees for the
management. As part of this annual incentives which will vest over a period Boards endorsement and approval by
review, the successors to key positions of time. shareholders. Having regard to the scope
are identified, and development plans and extent of a directors responsibilities
instituted for them. Details of SGXs compensation philosophy and obligations, the prevailing market
and the compensation framework conditions and referencing directors fees
No member of the RSDC is involved in including the long-term incentive awards against comparable benchmarks, the
deliberations in respect of any made thereunder, and the performance Board agreed with the RSDCs
remuneration, compensation, options or conditions for the vesting of the awards, recommendation that the current
any form of benefits to be granted to him. are found under Remuneration Report in framework for determining non-
this Annual Report. executive directors fees remain
Level and Mix of Remuneration unchanged. The framework for
Principle 8 Non-executive Directors determining non-executive directors
Remuneration fees (excluding the fees payable to the
The RSDC administers all the SGXs CEO is an executive director and is, SGX Chairman), as set out below, was last
performance-related elements of therefore, remunerated as part of senior revised in FY2011, and the basic fee and
remuneration for senior management. management and in accordance with the attendance fee have remained
A significant proportion of senior terms of his contract. He does not receive unchanged since FY2008. In view of the
managements remuneration is in the directors fees. internal review process that SGX has in
form of variable or at risk place, and that there is no change to the
compensation, awarded in a combination The SGX Chairman receives fees framework for determining non-
of short-term and long-term incentives. for being the Chairman of the Board, executive directors fees, SGX has not
The incentive schemes are designed to together with the provision to him appointed any external consultants to
align the interests of the CEO, key of a car with a driver, as approved by review the framework for FY2016.
management personnel and staff with a separate resolution at each AGM.

Basic Fee Fee for appointment to Audit Committee


Board Chairman S$750,000 per annum Committee chairman S$40,000 per annum
Director S$55,000 per annum Committee member S$30,000 per annum
Fee for appointment to other Board Committees
Committee chairman S$30,000 per annum
Attendance Fee S$1,500 per meeting Committee member S$20,000 per annum

The gross remuneration paid to the non-executive directors for the financial year ended 30 June 2016 was S$1,945,316
(details as set out in the table below):
Name of Director Directors fees Name of Director Directors fees
Mr Chew Choon Seng 1
S$ 825,000 Mr Lee Hsien Yang S$ 97,000
Mr Thaddeus Beczak S$ 114,500 Mr Liew Mun Leong S$ 146,000
Ms Chew Gek Khim S$ 121,864 Ms Lim Sok Hui (Mrs Chng Sok Hui) 2 S$ 51,318
Ms Jane Diplock AO S$ 160,500 Mr Ng Kok Song S$ 111,500
Mr Kwa Chong Seng S$ 131,500 Mr Quah Wee Ghee 3 S$ 25,634
Mr Kevin Kwok S$ 160,500
Total S$ 1,945,316
1 Excluding the provision of a car with a driver
2 Ms Lim was appointed as a director on 1 December 2015
3 Mr Quah stepped down as a director on 23 September 2015
Corporate Governance Report Annual Report 2016 55

Performance Overview
SGX seeks shareholders approval at the Results for the first three quarters are Risk Management and

Group Overview
AGM for the non-executive directors released to shareholders no later than Internal Controls
fees to be paid for the current financial 25 days from the end of the quarter. Principle 11
year so that the non-executive directors Annual results are released within 31
fees can be paid on a quarterly basis in days from the financial year-end. In RMC Composition
arrears. No director decides his own presenting the annual and quarterly The RMC comprises five (5) directors namely:
fees. The non-executive directors fees financial statements to shareholders, the Ms Chew Gek Khim
which are paid on a current year basis, Board aims to provide shareholders with Committee chairman and independent
will be payable to the director if he/she a balanced and clear assessment of SGXs non-executive Director
is in service at the end of the current financial results, position and prospects. Mr Thaddeus Beczak
quarter, or if the term of appointment Independent non-executive Director

Value Creation & Sustainability


ends within the quarter. Overseas For the financial year under review, the Ms Jane Diplock AO
directors are reimbursed for out-of- CEO and the Chief Financial Officer (CFO) Independent non-executive Director
pocket travelling and accommodation have provided assurance to the Board on Mr Kevin Kwok
expenses in Singapore. the integrity of the financial statements Independent non-executive Director
for SGX and its subsidiaries. For interim Ms Lim Sok Hui (Mrs Chng Sok Hui)
There are no share-based compensation financial statements, the Board provides Non-independent non-executive Director
schemes in place for non-executive directors. a statement of negative assurance to (appointed to RMC on 1 December 2015)
shareholders, in line with the Listing
Disclosure of Remuneration Rules. For the full year financial The Board is responsible for overseeing
Principle 9 statements, the Board with the SGXs risk management, framework and

Governance
concurrence of the AC provides an policies. To assist the Board, the Board
For disclosure of the remuneration of the opinion that the financial statements give has established the RMC, a dedicated
CEO and the five (5) top-earning a true and fair view of the results of the board risk committee. Its responsibilities
executives, please refer to Remuneration SGX Group and that SGX will be able to include reviewing and recommending to
Report in the Annual Report. The pay its debts as and when they fall due. the Board the type and level of risk that
Remuneration Report further sets out This, in turn, is supported by a negative SGX undertakes on an integrated basis to
the performance conditions used to assurance statement from the CEO and achieve its business strategy and the
determine EMCOs short-term and CFO. Management provides directors appropriate framework and policies for
long-term incentives. SGX has also with a monthly financial performance managing risks that are consistent with
disclosed in the Remuneration Report, report either (a) within 10 business days SGXs risk appetite. At the management
the remuneration of the five top-earning from month-end close; or (b) on or prior level, the EMCO has also established a
executives in actual figures, in line with to the day when the annual or quarterly dedicated Enterprise Risk Committee, Financials
best practices, with a breakdown in terms financial results are released. SGX has chaired by the Chief Risk Officer. This
of fixed pay, variable bonus, ex-gratia also procured undertakings from all its committee oversees and ensures that
payment (if any), long-term incentives directors and executive officers in risks are being managed by appropriate
and benefits-in-kind. The Remuneration compliance with Listing Rule 720(1). units holistically across the organisation.
Report also discloses the employee share
schemes that SGX has in place and how SGX is accountable to MAS on how it SGX has three lines of defence for risk
remuneration paid is varied according to discharges its responsibilities as an management. The operating units, the
SGXs and the individuals performance. exchange and clearing house, and as a first line of defence, own the risks at their
regulator. In this respect, an annual source and establish processes and
Others

None of the current employees are self-assessment report and an annual controls to respond to them. The second
related to the directors. report on the RCCs activities in relation to line of defence, comprising the
SGXs SRO conflicts management are independent Enterprise Risk
Accountability & Audit prepared and submitted to MAS. MAS also Management and Compliance functions,
Accountability conducts an annual on-site inspection of oversee the completeness and accuracy
Principle 10 SGX as part of its oversight of SGX. of risk assessments, risk reporting and
the adequacy of mitigation plans. Internal
The Board provides shareholders with Audit, as the third line of defence,
quarterly and annual financial reports. provides objective assurance to the Audit
56 Singapore Exchange

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Report

Committee. Together, these three lines of In addition to these exercises, the units financial, operational, compliance and
defence assure that there are adequate are required to perform a control information technology risks, are
internal controls relating to processes, self-assessment to provide objective adequate and effective as of 30 June 2016.
risk and control governance. assurance to the CEO and his
SGX has implemented an enterprise- management team that the controls are On 14 July 2016, SGXs securities
wide risk management framework to operating effectively. The program also market experienced a market disruption
facilitate the management of risks across requires the units to perform self-testing when the exchange ceased trading at
the organisation. to verify and substantiate their control 1138 hours, and remained closed for the
self-assessment outcomes. Together, all rest of the day. Investigations found
SGX recognises the importance of these tools and exercises provide greater that the event was caused by a disk
balancing risks and rewards to achieve assurance that the SGX groups risks failure and an application that did not
the optimal level of risk that SGX can identified are adequately managed. detect the problem. The disruption was
tolerate in its pursuit of its strategic Where deficiencies in controls are prolonged due to challenges in the
priorities and business opportunities. In identified, the operating units are able to orders and trade reconciliation process.
this regard, the Board has established a address and rectify such deficiencies in SGX has since taken remedial action to
Risk Appetite Statement to identify the a timely manner. address the key causes of the event. In
return objectives that are imperative to particular, the faulty disk has been
the organisation and the corresponding The Board has received assurance from replaced, SGX has taken measures to
risk boundaries that are acceptable to the CEO and CFO on the SGX groups improve its processes in data
support the achievement of these financial records and the effectiveness of generation, and is working closely with
objectives. This stated understanding SGXs risk management and internal members to improve their reconciliation
between the Board and Management controls. The Board also receives a processes and overall recovery and
aligns SGXs risk profile with its business separate quarterly representation on market resumption.
objectives and helps bring discipline as SGXs financial information and controls,
Management drives strategy within the including that the financial records have Audit Committee
established risk boundaries. It also been properly maintained and the Principle 12
reinforces SGXs risk culture through the financial statements give a true and fair
establishment of a tone from the top view of the SGX groups operations and AC Composition
regarding the nature and extent of risks finances, from the CEO and CFO. The AC comprises four (4) directors
that SGX is willing to accept. namely:
SGXs system of internal controls and risk Mr Kevin Kwok
There are two exercises that are management provides reasonable Committee chairman and independent
performed each year to identify, assess assurance against foreseeable events non-executive Director
and manage risks faced by SGX. The first that may adversely affect SGXs business Ms Jane Diplock AO
exercise adopts a top-down approach, objectives. The Board notes that no Independent non-executive Director
where key risks including strategic, system of internal controls and risk Mr Lee Hsien Yang
financial, operational, compliance and management can provide absolute Non-independent non-executive Director
regulatory risks, are identified. Mitigating assurance in this regard, or against the Mr Liew Mun Leong
actions are put in place to manage these occurrence of material errors, poor Independent non-executive Director
risks, and key risk indicators (KRI) are judgement in decision-making, human
established to monitor the risks. These error, losses, fraud or other irregularities. In compliance with the requirements of
KRIs are approved by the RMC and the the SFR 2005 and taking into
Board. The second exercise, the Risk Self Based on the internal controls consideration the relevant guidelines in
Assessment (RSA) exercise, adopts a established and maintained by SGX, the CCG 2012, all members of the AC are
bottom-up approach and allows work performed by the internal and non-executive directors who do not have
individual units to identify unit-level external auditors, and reviews any management and business
risks. Similar to the top-down exercise, performed by management and various relationships with SGX or any
mitigating actions are formulated to Board Committees, the Board, with the substantial shareholder of SGX. None of
manage the risks. This year, the RSA recommendation of the AC, is the AC members were previous partners
exercise has been enhanced to enable of the opinion that SGXs internal controls or directors of the Companys external
continuous self-assessments by the units. and risk management systems, addressing auditor, PwC, within the last twelve
Corporate Governance Report Annual Report 2016 57

Performance Overview
months or hold any financial interest in In February 2014, SGX conducted a Internal Audit and Compliance

Group Overview
the external auditor. The Board Request for Proposal exercise for The AC reviews the scope and plans
considers Mr Kevin Kwok, who has provision of external audit services. undertaken by the internal auditor and the
extensive and practical accounting and Following the ACs evaluation, the AC compliance function, and considers the
financial management knowledge and recommended the re-appointment results, significant findings and
experience, well qualified to chair the AC. of PwC as they possess the relevant recommendations together with
The members of the AC collectively have industry experience and knowledge as managements responses. The AC assesses
strong accounting and related financial well as a deep understanding of SGXs the adequacy and effectiveness of the
management expertise and experience. business, operations, systems and internal audit function and ensures that
They keep abreast of relevant changes risks. The Board accepted the ACs the internal auditor has direct and
to accounting standards and issues recommendation for PwCs unrestricted access to the Chairman of the

Value Creation & Sustainability


which have a direct impact on the re-appointment as the external auditor Board and the AC. The appointment,
financial statements. at the AGM held in September 2014. remuneration and resignation of the Head
of Internal Audit are reviewed by the AC.
Key Objectives On an annual basis, the AC evaluates the
The key objectives of the AC are to assist performance and effectiveness of the Other Matters
the Board in discharging its statutory external auditor and recommends the Whistleblowing Policy
and other responsibilities relating to the re-appointment of the external auditor SGX has a whistleblowing policy which
integrity of the financial statements, to the Board. encourages employees and vendors to
monitoring of the system of internal report malpractices and misconduct in
controls and independence of the The AC reviews the scope and the audit the workplace. The policy establishes

Governance
external auditors. plans and results of audits undertaken a confidential line of communication to
by the external auditor and considers all report concerns about possible
Role and Responsibilities of the AC significant findings, recommendations improprieties to the Head of Internal
and managements responses. It also Audit, and ensures the independent
Financial Reporting reviews the independence and investigation of, and follow-up of such
The AC meets on a quarterly basis objectivity of the external auditor, and matters. SGX will treat all information
to review the financial statements, assesses the nature, extent and costs received confidentially and protect the
including the relevance and consistency of non-audit services provided by the identity of all whistleblowers.
of the accounting principles adopted, external auditor, seeking to balance the Anonymous disclosures will be accepted
and the significant financial reporting independence and objectivity of the and anonymity honoured. Employees
issues and judgments to obtain external auditor with the business and who have acted in good faith will be
reasonable assurance as to the integrity operational needs of SGX. protected from reprisal. Reports can Financials
and fairness of the financial statements. be lodged by calling the hotline at
The AC recommends the financial Internal Controls and +65 6236 8585 or via email at
statements and corresponding SGXNet Regulatory Compliance whistleblowing@sgx.com. The AC
announcements to the Board for approval. The AC reviews and assesses the reviews all whistleblowing complaints
adequacy and effectiveness of SGXs at its quarterly meetings to ensure
External Auditor internal controls and regulatory independent, thorough investigation
The AC oversees SGXs relationship compliance. In order to do this, the AC and appropriate follow-up actions.
with its external auditor. It reviews the considers the reports, the processes and
selection of the external auditor and controls in place and carries out Interested Person Transactions Policy
Others

recommends to the Board the discussions with management, the Head SGX has procedures in place to comply
appointment, re-appointment and of Internal Audit, the Head of Legal, with the Listing Manual requirements
removal of the external auditor, as well Compliance & Corporate Secretariat and relating to interested person
as the remuneration and terms of the external auditor, at its quarterly AC transactions. All new directors are
engagement of the external auditor. meetings. Based on its reviews, the AC briefed on the relevant provisions that
The annual re-appointment of the makes recommendations to the Board they need to comply with. All interested
external auditor is subject to with regards to the adequacy and person transactions, if any, are reported
shareholder approval at SGXs AGM. effectiveness of SGXs internal controls. to and monitored by the Finance
department, and reviewed by the AC.
58 Singapore Exchange

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Authority of the AC Following the review and discussions, Management has referred to the
The Board has delegated to the AC the the AC recommended to the Board Checklist for Evaluation of External
authority to investigate any matter to approve the full year financial Auditors in the Guidebook for Audit
within its terms of reference. The AC has statements. Committees in Singapore and Guidance to
full access to the internal and external Audit Committees on ACRAs Audit
auditors as well as to management. It also Oversight of the external auditor Quality Indicators Disclosure Framework
has full discretion to invite any director or The AC approved the scope and audit to set the evaluation criteria.
officer to attend its meetings and has plans undertaken by the external auditor,
access to various resources, including reviewed the results of the audits, On the basis of their own interactions
external consultants, to enable it to significant findings and with PwC and with managements
discharge its responsibilities properly. recommendations as well as report, the AC assessed and concluded
managements responses. that PwC has fulfilled its responsibilities
Activities in FY2016 as external auditor. The Board concurred
The AC met four (4) times during the The AC assessed the independence and with the ACs endorsement. Accordingly,
financial year under review. The quality of the external auditor the Board recommends the re-
Chairman, CEO, President, CFO, Chief Risk throughout the year and also met with appointment of PwC at the coming AGM.
Officer, Head of Technology, Head of the external auditor without the
Internal Audit, Head of Legal, Compliance presence of management. The external SGX has complied with Listing Rules 712
& Corporate Secretariat and the external auditor provided regular updates to the and 715 in the appointment of PwC as its
auditor were invited to attend these AC on relevant changes to the accounting external auditor.
meetings. The following matters were standards and the implications on the
reviewed during the meetings: financial statements. Non-audit services
The AC reviewed the volume and nature
Financial matters The AC received a report from of non-audit services provided by the
In the review of the financial statements, management on their evaluation of the external auditor during the financial year.
the AC has discussed with management performance and effectiveness of the Based on this and other information, the
the accounting principles that were external auditor. This report assessed the AC is satisfied that the financial,
applied and their judgment of items that quality of the external auditor across a professional and business relationships
might affect the integrity of the financial number of evaluation criteria, including between SGX and the external auditor
statements. The following significant measures of relevance and quality of its will not prejudice their independence
matters impacting the financial work as well as its level of independence. and objectivity.
statements were discussed with
management and the external auditor
and were reviewed by the AC:

Significant matters How the AC reviewed these matters and what decisions were made
Valuation of available-for- The AC considered the approach and methodology applied to the valuation model in assessing the valuation of the
sale (AFS) financial asset AFS financial asset relating to the unlisted equity securities of BSE Limited.

The AC reviewed the reasonableness of cash flow forecasts, long-term growth rate and discount rate used in the
valuation model.

The valuation of the AFS financial asset was also an area of focus for the external auditor. The external auditor has
included this item as a key audit matter in its audit report for the financial year ended 30 June 2016. Refer to page 90
of this Annual Report.
Impairment assessment The AC considered the approach and methodology applied to the valuation model in goodwill impairment assessment
of goodwill and as well as the assessment for indicators of impairment of intangible asset. It reviewed the reasonableness of cash flow
intangible asset forecasts, the long-term growth rate and discount rate.

The impairment review was also an area of focus for the external auditor. The external auditor has included this item as
a key audit matter in its audit report for the financial year ended 30 June 2016. Refer to page 90 of this Annual Report.
Corporate Governance Report Annual Report 2016 59

Performance Overview
The total fees paid to our external presence of management, more than recommendations by the internal and

Group Overview
auditor, PwC, are as disclosed in the four (4) times for the financial year under external auditors to ensure management
table below: review. The Head of Internal Audit has implemented them in a timely and
External Auditor Fees % of total provided regular updates to the AC appropriate fashion and reports the
for FY2016 S$000 audit fees on the workings of the Internal Audit results to the AC every quarter.
Total Audit Fees 692 function. For the financial year under
Total Non-Audit Fees 331 48% review, the AC Chairman guided the Line of Reporting and Activities
Total Fees Paid 1,023 Internal Audit function in adopting the Internal Audit is an in-house function
prescribed practices published in the within SGX. The Head of Internal Audit
Internal Controls and revised Audit Committee Guidance reports directly to the AC and
Regulatory Compliance Committee Guidebook. administratively to the CEO. The AC

Value Creation & Sustainability


The AC reviewed and assessed the approves matters relating to the Internal
effectiveness of SGXs internal controls The AC also reviewed managements and Audit Charter, risk assessment and
and regulatory compliance. Taking into Internal Audits assessment of fraud risk related audit plans and results and
account the internal controls established and held discussions with the external follows up on internal audit activities.
and maintained by SGX, the work auditor to obtain reasonable assurance The AC approves the hiring, removal,
performed by the internal and external that adequate measures were put in performance evaluation and
auditors as well as the compliance place to mitigate fraud risk exposure compensation of the Head of Internal
function, and reviews performed by in SGX. Audit. Internal Audit has unfettered
management and various Board access to all of SGXs documents, records,
committees, the AC is of the opinion and Interested Person Transactions properties and personnel including the

Governance
recommends to the Board that SGXs and Material Contracts (Rule 1207(8) AC Chairman.
internal controls addressing financial, of the Listing Manual)
operational, compliance and information There were no Interested Person Internal Audit operates within the
technology risks were adequate as at Transactions and no material contracts framework stated in its Internal Audit
30 June 2016. entered into by SGX or any of its Charter, which is approved by the AC.
subsidiaries involving interests of any The primary role is to assist the Board
Oversight of Internal Audit Director or controlling shareholder and senior management to meet the
and Compliance during FY2016. strategic and operational objectives of
The AC exercised its oversight over SGX, by providing an independent and
Internal Audit and Compliance Internal Audit objective evaluation of the adequacy
throughout the year. The AC reviewed Principle 13 and effectiveness of risk management,
the following: internal controls and governance Financials
scope of the annual internal audit Internal Audit processes.
plans to ensure that the plans Annually, Internal Audit prepares and
provided a sufficiently robust review executes a robust risk-based audit plan, All audit reports are circulated to
of the internal controls of SGX; which complements that of the external the AC, the CEO, the external auditor
scope of annual compliance plans; auditor, so as to review the adequacy and relevant senior management
significant audit observations and and effectiveness of SGX Groups system representatives. The progress of
managements responses thereto; of internal controls. These include corrective actions on outstanding audit
regulatory breaches and operational, financial, compliance issues is monitored through company-
managements responses thereto; and information technology controls. wide issue management systems.
Others

approval of Internal Audit and In addition, the external auditor will Information on outstanding issues is
Compliance Charters; highlight any material internal control categorised according to severity and
adequacy and effectiveness of weaknesses which have come to their quarterly reports are sent to senior
Internal Audit; and attention in the course of their management and the AC.
budget and staffing for Internal Audit statutory audit. All audit findings and
and Compliance functions. recommendations made by the internal
and external auditors are reported to the
The AC Chairman met regularly with the AC. Significant issues are discussed at AC
Head of Internal Audit without the meetings. Internal Audit follows up on all
60 Singapore Exchange

Corporate
Governance
Report

Adequacy of the Internal Compliance general meetings of shareholders. SGXs


Audit Function The Compliance function is independent Articles allow a shareholder to appoint
Internal Audits annual workplan is of the business functions and reports up to two proxies to attend and vote in
established in consultation with, but directly to the CEO. The role of the the shareholders place at the general
independent of management and is Compliance function and its meetings of shareholders. Pursuant to
aligned with the risk management accountability to the CEO and the Audit the introduction of the multiple proxies
framework of SGX. The plan is submitted Committee is described in the regime under the Singapore Companies
to and approved by the AC. The AC is Compliance Charter, which is reviewed (Amendment) Act 2014, indirect
satisfied that the Internal Audit function annually and approved by the Audit investors who hold SGX shares through
has adequate resources to perform its Committee. The Compliance function a nominee company or custodian bank or
functions, and has appropriate standing has various policies and procedures in through a CPF agent bank may attend
within SGX. The AC also reviews annually place which govern the execution of an and vote at each AGM.
the adequacy and effectiveness of the annual risk-based compliance
Internal Audit function. As at 30 June programme, focusing on regulatory risks Communication
2016, there are 10 staff within the arising from SGXs obligations to comply with Shareholders
Internal Audit function. with applicable laws and regulations. Principle 15
The programme comprises a
Professional Standards combination of regulatory risk Disclosure of Information
and Competency assessments and responses, compliance on a Timely Basis
Internal Audit is a member of The training (including mandatory annual SGX is committed to disclosing to
Institute of Internal Auditors (IIA) and e-learning), independent compliance its shareholders as much relevant
has adopted the Standards for the reviews, and regular reporting to senior information as possible, in a timely,
Professional Practice of Internal Auditing management, the AC and regulators on fair and transparent manner.
(IIA Standards) laid down in the breaches, significant compliance issues
International Professional Practices and relevant action plans. In addition to comprehensive, accurate
Framework issued by the IIA. Internal and timely disclosure of information that
Audit continues to meet or exceed the Shareholder Rights is material or that may influence the price
requirements of the IIA Standards in all and Responsibilities of SGX shares on SGXNET in compliance
key aspects. Quality assessment reviews Shareholder Rights with the requirements of the Listing
are carried out at least once in five years Principle 14 Manual, SGX adopts the practice of
by external qualified professionals. The regularly communicating major
last review was completed in 2013 and SGX Groups corporate governance developments in its businesses and
the next review will be conducted by practices promote the fair and equitable operations through the appropriate
2017. Besides the IIA, the technology treatment of all shareholders. To media. Such channels include news
auditors in the Internal Audit function are facilitate shareholders ownership rights, releases, annual reports, shareholder
members of the Information Systems SGX ensures that all material information circulars, shareholders meetings, and
Audit and Control Association (ISACA). is disclosed on a comprehensive, accurate direct announcements.
and timely basis via SGXNet. SGX
The professional competence of the recognises that the release of timely and SGX notifies investors in advance of the
internal auditors is maintained or relevant information is central to good date of release of its financial results,
upgraded through training programmes, corporate governance and enables through an SGXNet announcement, and
conferences and seminars that provide shareholders to make informed decisions a media release. Results for the first
updates on auditing techniques, in respect of their investments in SGX. three quarters are released to
regulations, financial products and shareholders no later than 25 days from
services. Internal Audit is staffed with Shareholders are entitled to attend the the end of the quarter. Annual results are
suitably qualified and experienced general meetings of shareholders and are released within 31 days from the financial
professionals with a range of 5 to 15 afforded the opportunity to participate year-end.
years of diverse operational, technology effectively in and vote at general
and financial audit experience. meetings of shareholders. Shareholders Briefings to present quarterly and
are also informed of the rules, including full-year results are held for the media
the voting procedures that govern the and analysts. Live video webcasts of
Corporate Governance Report Annual Report 2016 61

Performance Overview
briefings, accessible by the public, are Financial Results; and resolutions passed at the general

Group Overview
available on SGXs website. Calendar of Events. meetings of shareholders for greater
transparency in the voting process. Votes
Interaction with Shareholders The latest Annual Report, financial cast for, or against, each resolution will
At each AGM, the CEO delivers a results (including webcasts of the be tallied and displayed live-on-screen
presentation to update shareholders quarterly and full-year results briefings to shareholders immediately at the
on SGXs progress over the past year. for media and analysts and press meeting. The total numbers and
The Directors, EMCO and senior releases) and company announcements percentage of votes cast for or against
management are in attendance to are posted on the website following their the resolutions are also announced after
address queries and concerns about release to the market, to ensure fair the meeting via SGXNet. However, as the
SGX. SGXs external auditor also attends dissemination to shareholders. SGX authentication of shareholder identity

Value Creation & Sustainability


to help address shareholders queries also makes available speeches and and other related security and integrity
relating to the conduct of the audit and presentations given by the Chairman, of the information still remain a concern,
the preparation and content of the CEO, and senior management, and a SGX has decided, for the time being, not
external auditors report. range of other information considered to implement voting in absentia by mail,
to be of interest to investors. e-mail or fax.
Dividend Policy
For FY2017, the Board aims to declare SGXs website has a dedicated Investor The Chairman of each of the AC, NGC,
a base dividend of 5 cents per share Relations link, which features the latest RSDC, RCC and RMC, external auditor,
every quarter. For each financial year, and past financial results and related senior management and legal advisors
the Board aims to pay, as dividend, information. The contact details of the (where necessary), are also present

Governance
an amount which is no less than Investor Relations team are available on to address shareholders queries.
(a) 80% of the annual net profit after tax; the dedicated link, as well as in the
or (b) 20 cents per share, whichever is Annual Report, to enable shareholders to SGX provides for separate resolutions
higher. The difference between the contact SGX easily. Investor Relations has at general meetings on each distinct
targeted dividend and the interim base procedures in place for addressing issue. All the resolutions at the general
dividend will be declared and paid as final investors queries or complaints as soon meetings are single item resolutions.
dividend of each financial year. as possible. Detailed information on each item in the
AGM agenda is in the explanatory notes
Corporate Website Conduct of to the AGM Notice in the Annual Report.
SGX adopts transparent, accountable Shareholder Meetings
and effective communication practices as Principle 16 Audiocasts of the AGM proceedings are
a key means to enhance standards of publicly available on SGXs website. Financials
corporate governance. We aim to provide Shareholders are informed of
clear and continuous disclosure of our shareholders meetings through Other Codes & Practices
corporate governance practices through published notices and reports or circulars Employee Code of Conduct & Ethics
efficient use of technology. The following sent to all shareholders or at the All employees are required to observe
information is made available on our shareholders election, made available and maintain high standards of integrity,
corporate website within six (6) weeks electronically. The general meeting as well as comply with laws, regulations
from the date of events: procedures provide shareholders the and company policies. SGX sets
Board of Directors and EMCO opportunity to raise questions relating standards of ethical conduct for
profiles; to each resolution tabled for approval. employees, which covers all aspects of
Others

Minutes and Summary of Opportunities are given to shareholders the business operations of SGX such as
Proceedings of general meetings to participate, engage, and openly work ethics, personal conflicts of
of shareholders; communicate their views on matters interest, confidentiality of information,
Audiocasts of general meetings relating to SGX to the directors. related party transactions, gifts and
of shareholders; dealings in securities.
Annual Reports; Shareholders are given the opportunity
Letter/Circular to Shareholders; to vote at the general meetings of
Company announcements; shareholders. SGX has been conducting
Press releases; electronic poll voting for all the
62 Singapore Exchange

Corporate
Governance
Report

Securities Dealings Confidential Information


To guard against insider trading, SGX deals with confidential information
SGX adopts a black-out policy that on a daily basis. Protecting confidential
is consistent with what is prescribed information is of paramount importance
under the Listing Manual. All directors to establishing and maintaining a trusted
and staff and their related persons marketplace. SGX provides clear
(e.g. spouses and financial dependents) guidance to its staff on the proper
are prohibited from dealing in SGXs management, use and disclosure of
securities for a period of two weeks confidential information. SGXs
before the release of the financial results Confidentiality Policy and SGXs Personal
for the first three quarters of SGXs Data Protection Policy set out SGXs
financial year, and one month before framework and procedures for
the release of the full year results. compliance with, among other things,
the user confidentiality obligations
SGX issues a quarterly notice to its under the SFA, and the personal data
directors and staff informing them not obligations under the Personal Data
to deal in SGXs securities during a Protection Act.
black-out period and that they are
prohibited at all times from trading in Anti- Corruption, Gifts and
SGX securities if they are in possession Entertainment
of unpublished price-sensitive SGX has zero tolerance for bribery and
information. Directors and staff are corruption. SGX requires its employees
also discouraged from dealing in SGXs to comply with the relevant anti-
securities on short term considerations. corruption legislation in Singapore and
overseas, and to follow SGXs internal
In addition to the black-out policy on procedures when giving or receiving
SGXs securities, staff and their related gifts, entertainment, sponsorships and
persons who want to trade securities charitable contributions. This
of any company listed on Singapore requirement extends to all of SGXs
Exchange Securities Trading Limited business dealings in all countries in
must, subject to certain prescribed which it operates. SGX will always forgo
exceptions, seek prior approval from business rather than pay bribes and
their managers. Staff are prohibited at fully supports its employees when
all times from trading in the securities faced with losing business owing to
of any company if they are in possession SGXs refusal to pay bribes.
of material non-public information
concerning that company.

All SGX staff are required to complete an


annual online refresher module on SGXs
staff dealing requirements as part of
SGXs mandatory compliance training.
Corporate Governance Report Annual Report 2016 63

Performance Overview
Summary of Disclosures of Code of Corporate Governance 2012

Group Overview
Board Remuneration Accountability Shareholder Rights
Matters Matters and Audit and Responsibilities
The Boards Conduct Procedures for Developing Accountability Shareholder Rights
of Affairs Remuneration Policies Principle 10 Page 55 Principle 14 Page 60
Principle 1 Page 46 Principle 7 Page 53 Guideline 10.1 Page 55 Guideline 14.1 Page 60
Guideline 1.1 Page 46 Guideline 7.1
#
Page 53 Guideline 10.2 Page 55 Guideline 14.2 Page 60
Guideline 1.2 Page 51 Guideline 7.2 Page 53 Guideline 10.3 Page 55 Guideline 14.3 Page 60
Guideline 1.3# Page 46 Guideline 7.3# Page 54
Guideline 1.4# Pages 46-47 Guideline 7.4 Page 53 Risk Management Communication
Guideline 1.5# Page 48 and Internal Controls with Shareholders
Guideline 1.6# Page 48 Level and Mix Principle 11 Page 55 Principle 15 Page 60

Value Creation & Sustainability


Guideline 1.7 Page 48 of Remuneration Guideline 11.1 Page 56 Guideline 15.1 Page 61
Principle 8 Page 54 Guideline 11.2 Page 56 Guideline 15.2 Page 60
Board Composition Guideline 8.1 Page 54 Guideline 11.3# Page 56 Guideline 15.3 Page 61
and Guidance Guideline 8.2 Page 54 Guideline 11.4 Page 55 Guideline 15.4# Page 60
Principle 2 Page 48 Guideline 8.3 Page 54 Guideline 15.5# Page 61
Guideline 2.1 Page 48 Guideline 8.4 Page 54 Audit Committee
Guideline 2.2 Page 48 Conduct of
Principle 12 Page 56
Guideline 2.3# Page 48 Disclosure on Remuneration Guideline 12.1# Page 56 Shareholder Meetings
Guideline 2.4# Page 48 Principle 9# Page 55 Principle 16 Page 61
Guideline 12.2 Page 56
Guideline 2.5 Page 49 Guideline 9.1# Pages 54-55 Guideline 16.1 Page 61
Guideline 12.3 Page 57
Guideline 2.6 Page 49 Guideline 9.2# Pages 54-55 Guideline 16.2 Page 61
Guideline 12.4 Page 57
Guideline 2.7 Page 49 Guideline 9.3# Page 55 Guideline 16.3 Page 61
Guideline 12.5 Pages 58-59
Guideline 2.8 Page 49 Guideline 9.4# Page 55 Guideline 16.4 Page 61
Guideline 12.6# Page 59

Governance
Guideline 9.5# Page 55 Guideline 12.7# Page 57 Guideline 16.5 Page 61
Chairman and Guideline 9.6# Page 55 Guideline 12.8# Pages 58-59
Chief Executive Officer
Guideline 12.9 Page 56
Principle 3 Page 49
Guideline 3.1# Page 49 Internal Audit
Guideline 3.2 Page 49
Principle 13 Page 59
Guideline 3.3 Page 50
Guideline 13.1 Page 59
Guideline 3.4 Page 50
Guideline 13.2 Page 59
Guideline 13.3 Page 60
Board Membership
Guideline 13.4 Page 60
Principle 4 Page 50 Guideline 13.5 Page 57
Guideline 4.1# Page 50
Guideline 4.2 Page 50

Financials
Guideline 4.3 Page 51
Guideline 4.4# Page 51
Guideline 4.5 Page 51
Guideline 4.6# Page 50
Guideline 4.7 # Pages 12-17

Board Performance
Principle 5 Page 51
Guideline 5.1# Page 51
Guideline 5.2 Page 52
Guideline 5.3 Page 52

Access to Information
Others

Principle 6 Page 52
Guideline 6.1 Page 52
Guideline 6.2 Page 52
Guideline 6.3 Page 53
Guideline 6.4 Page 53
Guideline 6.5 Page 53

# Express disclosure requirements in Code of Corporate Governance 2012


64 Singapore Exchange

Self-Regulatory
Organisation
Governance Report

Obligations
Our regulatory activities remain focused on:
SGX is a front-line
regulator, regulating
market participants
including listed
companies, and
trading & clearing Operating Admitting Providing Supporting
members. SGX is also a fair, orderly and high quality safe and efficient the continuous
a listed, for-profit transparent market issuers and market clearing and development of
entity with a widely intermediaries settlement facilities SGXs markets and
clearing houses
distributed ownership
and shareholder
base. This gives rise
to Self-Regulatory We achieve our objectives through stringent framework for managing actual or perceived
listing and trading rules. We apply strict conflict arising from SGXs dual role as a
obligations. We
admission criteria on our members, sponsors commercial for-profit entity and a Securities
employ the highest and their registered professionals and issuers Market Regulator.
standards in carrying to assure their quality and safeguard the
out our dual role integrity of the markets and clearing houses. The RCC decides on conflict cases, as needed,
and ensure that any Issuers must ensure the timely, accurate and and reviews the regulatory implications
potential conflicts adequate disclosure of material information. of our strategic initiatives. The RCC also
We also impose prudent financial ensures the adequacy of resources allocated
between our
requirements on our members and have to the regulatory function and oversees the
responsibilities as a robust default management processes. To processes for identifying and managing
regulator and as a ensure compliance with our rules, we conduct regulatory conflicts. The RCC reports to MAS
listed company are comprehensive ongoing supervision and annually on the adequacy of our conflicts
addressed. We remain surveillance and take enforcement action management framework and practices as
the custodians of trust when necessary. We continually benchmark required under the Securities and Futures Act.
ourselves against developed jurisdictions and
and confidence in the
established international standards to improve The RCC reported to the MAS in November
Singapore market. our systems and processes. 2015 that they had fulfilled their statutory
duties in overseeing SRO governance within
Managing Self-Regulatory SGX, adequacy of regulatory resources and in
Organisation (SRO) Conflicts addressing SRO conflicts.
The Monetary Authority of Singapore
(MAS) regulates SGX in the discharge of our
regulatory functions and our management Enhancing the Quality
of regulatory conflicts. We have a strong of Our Marketplace
governance framework in place to manage
any perceived or actual conflicts. The We continue to set and enforce regulation
Regulatory Conflicts Committee (RCC) assists to assure a fair, orderly and transparent
the SGX Board with the management of SRO marketplace and as such have implemented
conflicts. The RCC comprises directors who are new rules and policies this year.
independent of management and business
relationships with SGX. Appointments to the Minimum Trading Price Requirement
RCC are subject to MAS approval. In addition, The Minimum Trading Price (MTP) of S$0.20
the Listings Advisory Committee was a share for Mainboard companies came into
introduced in October 2015 to enhance SGXs effect after a one-year transition period ended
Self-Regulatory Organisation Governance Report Annual Report 2016 65

on 1 March 2016. Several issuers were affected as a These committees will enhance the transparency and

Performance Overview
result of their share price being below the required independence in the administration of sanctions for
MTP. SGX continued its engagement with all affected such cases.
issuers over the course of the year to help transition
them to the new requirement. We also made several Retail Access to Wholesale Bonds
refinements including a change in the calculation We introduced a bond-seasoning framework as part
methodology of the Volume Weighted Average of efforts to increase the range of bonds available to
Prices (VWAP) for determining the MTP. Another retail investors.
refinement was the extension of time granted to
companies that had made efforts to comply with The framework enables retail investors to buy
the MTP requirement such as those which had wholesale bonds initially offered to institutions and

Group Overview
undertaken consolidation within the review period accredited investors, six months after the bonds are
and those unable to comply with the MTP due solely listed on SGX. These bonds will be offered by issuers
to turbulent market conditions. We worked to place that meet minimum criteria relating to their size,
safeguards against error trades in consolidated track record and listing history. After the six-month
companies that included technical changes for the period, issuers may also make subsequent direct
application of circuit breakers and fat finger checks, offers of bonds to retail investors under the same
provision of a list of upcoming consolidations to terms without issuing a prospectus. An exempt bond
brokers as well as reminders to brokers to ensure that issuer framework was also introduced to allow
they draw investors attention to stocks trading on certain eligible issuers to offer bonds directly to
the first day post consolidation. investors at the onset without a prospectus.

Value Creation & Sustainability


We will continue to closely monitor and review the Association of Banks Singapore
current form of the MTP requirement with a view to Due Diligence Guidelines
further enhancing effectiveness and efficiency. To raise the standard of due diligence activities
on all companies wanting to list on SGX,
Listings Committees we worked closely with the Association of Banks
The establishment of the independent in Singapore (ABS), auditors, lawyers, local
Listings Committees is now complete with the and international banks, and corporate finance
committees set up to strengthen the listing firms to refine and update the ABS Listings Due
policy-making and review process and enhance Diligence Guidelines.

Governance
how listing rules are enforced.
The updates draw upon our experiences with
The Listings Advisory Committee (LAC) enables regulating foreign issuers from developing
SGX to draw upon the view of a panel of countries in setting out additional due diligence
independent and experienced market professionals procedures, which Issue Managers and Full
who will provide advice on SGX's listing process as Sponsors will be expected to undertake when
well as listing applications to the Mainboard which preparing a new applicant for listing on SGX. The
meet certain referral criteria. The criteria include improvements to the Guidelines will help ensure
where novel or unprecedented issues are involved, quality listings and grow investors trust and
specialist expertise is required, or matters of public participation in our market.
interest are involved. Financials
Sustainability Reporting
The establishment of the LAC also helps address SGX introduced a new listing rule for sustainability
perceptions of self-regulatory organisation reporting on a comply or explain basis for all
conflicts, or concerns SGX could compromise on companies listed on the exchange. By reporting on
regulatory standards and/or admit companies for its Environmental, Social and Governance aspects,
commercial benefits. a company can further enhance transparency and
visibility among investors who support sustainable
To improve the governance and compliance investment as well as build and maintain trust in
standards of the listing space, SGX also strengthened their business. The requirement for sustainability
Others

the range of enforcement actions it can take against reporting on a comply or explain basis was
companies, directors and executive officers, issue developed with extensive feedback gathered from
managers, and financial advisors advising on reverse surveys and working groups with listed companies,
takeover applications, for Listing Rule breaches. The investors and a detailed public consultation.
independent Listings Disciplinary Committee (LDC) To enhance reporting capabilities of listed
and Listings Appeals Committee (LApC) were companies, SGX will invite CEOs to a briefing session
established to hear and determine charges and and is collaborating with Global Compact Network
appeals for cases involving rule breaches that are Singapore to organise training workshops by
more serious and entailing more severe sanctions. sustainability reporting consultants.
66 Singapore Exchange

Self-Regulatory
Organisation
Governance Report

Enhanced Trade with Caution Announcements Online Calendar for Annual General Meetings
We enhanced our Trade with Caution (TWC) SGX together with the Chartered Secretaries
announcements by providing more targeted Institute of Singapore launched an online calendar
for listed companies to indicate their tentative
and higher value information
Annual General Meeting (AGM) dates. The calendar
helps companies to try to schedule their AGMs on
in instances of unusual trading activity in a days that are either free of other AGMs, or have
companys stock. Where warranted, information fewer AGMs occurring. The initiative is in response to
gathered from review of trading activities will also feedback that many AGMs are clustered around the
be included to enhance informational value and last two weeks of April; if AGMs are more evenly
provide transparency of both SGXs concerns as well spread out throughout April, investors may be able
as its regulatory actions. The changes follow to attend a higher number of AGMs to exercise their
feedback from stakeholders about the previous high shareholder vote.
volume of TWC announcements with little new
information being provided. SGX has issued two Refining SGX Trading Rulebook
TWCs following the enhancements. As part of our continuous effort to renew our
policies, we embarked on a major initiative to
Management of Price Sensitive Information completely review our Securities and Derivatives
We widened the scope of the requirement for listed Trading rulebooks. The aim is to ensure that our
companies to maintain a privy person list to cover all policies are relevant to the current market
material transactions, from only certain significant environment, aligned with international practices,
transactions i.e. takeovers, reverse takeovers or and consistent across the markets we operate. We
very substantial acquisitions previously. The privy will do so with active involvement of our Members
person list is a useful tool when SGX conducts an and relevant stakeholders in our regulatory
investigation into, for instance, insider trading. To development process.
enhance robustness in the prevention of insider
trading, we are setting up a working group comprising Automated Trading Service in Hong Kong
key stakeholders to examine the practices currently We continued work with the Hong Kong Securities
adopted for price-sensitive information and identify and Futures Commission in FY2016 which resulted in
areas for improvement. Once complete, we will issue an approval of the Automated Trading Services for
a set of best practices. This will complement the SGX-ST that will allow the Hong Kong broking
exchanges surveillance of unusual trading in shares community direct access to shares listed on SGX-ST.
of companies involved in significant transactions.

Surveillance Handbook Regulatory Activities in FY2016


To provide guidance to Members on industry best
practices and to define the baseline standards for Front-line Regulatory Activities
trade surveillance monitoring programs, we are SGX conducts rigorous real-time surveillance of
developing a Members Surveillance Hand Book. trading activities to promote orderly trading and
Simultaneously, we are working on a new initiative detect any undesirable market conduct. Where
to share information from our surveillance activities there is any indication of anomalous trading, we
that relate to individual members and their issue a public query to the listed company to see if it
respective trading representatives to enable has unannounced material information that could
members to enhance their own trade monitoring, explain the trading activity. This year, we issued 136
and nip any potential misconduct in the bud. public queries.

For potential breaches of the law, SGX works


with the relevant agencies and authorities to take
appropriate action. This helps in preserving the
integrity of our market. In the year, we referred
32 cases to the authorities.
Self-Regulatory Organisation Governance Report Annual Report 2016 67

Appropriate enforcement action is taken against We put emphasis on engaging with key stakeholders

Performance Overview
errant Members and Sponsors who breach our by keeping them well informed of our initiatives,
rules and financial requirements. For breaches seeking for, and responding directly to their
of our rules, we imposed a total of S$40,000 in feedback and supporting greater discussion
composition fines on two of our Member firms and of initiatives.
issued letters of warnings and advisory notes to other
Member firms, Sponsors and Registered professionals. To enhance transparency and address trends
We also charged a trading representative for having that are of regulatory concern, we published
created a false market in certain share counters by seven Regulators Columns to provide guidance
employing a layering scheme. The trading and awareness on topical issues as well for the
representative was fined S$180,000 and suspended first time, case studies of private disciplinary actions.

Group Overview
for 6 months by the Disciplinary Committee. We introduced guidelines for Catalist sponsors, a
toolkit to aid companies in common corporate
Listings Applications actions and a half-yearly report on long-suspended
We continued to uphold high listing standards to companies. All these were made available on our
ensure the quality of our issuers. During the year, we website. We also published a summary of the
received 29 Initial Public Offering (IPO) and Reverse Listings Advisory Committees first advice.
Takeover (RTO) applications and notifications.
Including applications and notifications from the We also spoke at several conferences and forums
previous year, 24 were approved or proceeded to and engaged the media and industry professionals
lodge and 6 applications were returned or withdrawn. to provide insights into our Regulatory processes.

Value Creation & Sustainability


This included our first-ever SGX Equities Dialogue,
Member and Sponsors Admissions the first regulatory round-table which centered on
and Inspections sustainability reporting, and an information session
We conduct periodic inspections and reviews of on the initial public offer process for members
Members to ensure that they have put in place of the media.
adequate internal controls in accordance with our
rules. We also monitor the financial health of all We will continue to be open to feedback from
Members on an ongoing basis. Members must our stakeholders as we execute our regulatory
immediately notify us when their financial resources initiatives. We intend to increase clarity on our
decline to prescribed threshold levels so that we can regulatory approaches, keep our communication

Governance
take early and appropriate mitigating actions. This is channels with stakeholders open and increase
necessary to protect the interests of their customers. transparency on our regulatory thinking and
In addition, we conduct periodic inspections and focus areas.
reviews of Sponsors for assurance that key processes,
procedures and systems are in place to discharge their
duties and obligations under our rules. Engaging the Investing Public

We strengthened supervision of Members by SGX is committed to improving investors


increasing the number of on-site inspections and understanding and ability to make better-informed
compliance visits from 25 in FY2015 to 30 in FY2016. investment decisions. The Investor Education Fund
We also conducted risk-based inspections on three (IEF) supports initiatives towards this endeavor with
Sponsors and offsite reviews on four Sponsors. the Investor Education Committee (IEC) comprising Financials
industry practitioners and senior management of
We are constantly looking to broaden the scope SGX administering the IEF. The IEF is a fund
of participation in our exchange and clearing house. comprising composition sums, fines, orders for costs
In this respect, we admitted 26 Proprietary Trading arising from or in connection with breaches of SGX
Members and 10 Agency Members, including our rules and other monies contributed to the fund for
first Securities Remote Trading Member. On the investor education purposes. A recent amendment
Catalist sponsorship front, we admitted two full of SGX Listing rules in relation to the establishment
Sponsors during the year. of the Listings Committees gives the Listings
Disciplinary Committee and Listings Appeals
Others

Committee powers to impose fines against issuers


Enhancing Trust in Regulation and make orders for costs in connection to breaches
of listing rules. These monies are channelled to the
Communications play a vital role in enhancing trust IEF for investor education purposes.
and developing our market. In FY2016, we focused
on increasing the markets understanding of our In FY2016, the IEF saw an increase of S$220,000
regulatory approaches, increased engagements with arising from fines and composition sums collected in
stakeholders and made more regulatory resources connection to rule breaches. During the year, the IEC
available online. approved funding of more than S$1.6m for investor
68 Singapore Exchange

Self-Regulatory
Organisation
Governance Report

education projects that included both SGX-led In addition to initiatives supported by the IEF,
projects as well as supporting the initiatives of SGX continued to partner stakeholders in
industry partners. strengthening investor education. These include
the Save & Invest Portfolio Series an education
Continuing with its retail outreach efforts, initiative jointly put together by CFA Society
SGX held two runs of My First Stock Carnival Singapore, Singapore Press Holdings, MAS and SGX.
(MFSC). MFSC @ UniSIM took place in October 2015. This initiative has helped many Singaporeans learn
MFSC @ Ngee Ann City Civic Plaza was held in May how to construct investment portfolios to meet
2016 where it included The Real Estate Investment their financial goals and will continue until
Trust (REITs) Race to help new investors learn about December 2016.
the REITs sector and investment opportunities in
Singapore. These events attracted about 3,000 and An Exchange Traded Fund (ETF) education campaign
5,200 visitors respectively. was also rolled out following the change in Excluded
Investment Product (EIP) requirements, which gave
SGX also launched a series of initiatives to raise retail investors more options in EIP ETFs to choose
investors understanding of the risks and from. The ETF campaign includes monthly ETF
opportunities associated with investing in the fast seminars, an ETF Pavilion @ INVEST Fair, a 5-part
evolving digital sector. An independent research editorial series on Straits Times, ETF animated
paper titled Investing in Financial Technology and e-tutorials, monthly ETF market research reports
Consumer Digital Technology Companies was and an enhanced ETF screener providing information
commissioned which is available on the SGX at a glance.
webpage and has seen over 1,900 downloads
to-date. Complementing this is a series of investor We also launched a new 2-minute segment
education videos and seminars to provide an SGX Stock Market Beat that debuted on Channel 8
overview and key summaries of the sub-sectors. in November 2015 and ran for 6 weeks to provide
To date, four videos have been produced and in viewers with bite size investment and market
total, they have achieved over 155,000 views. information. To help new investors ease into their
Five seminars were organised this year and first steps in investing we launched a new Welcome
attracted a mix of institutional and retail investors, e-Newsletter for new CDP account holders by
as well as financial professionals. introducing relevant SGX tools and resources to
them. Since the launch in March 2016, the
The IEF also co-funded various partners on investor e-newsletter maintains an average Open Rate
education initiatives. SGX supported the Securities of 92%.
Investors Association (Singapore) (SIAS) in various
projects and Securities Association of Singapore
(SAS) in their seminars and workshops to upskill
customers of brokers.
Annual Report 2016 69

Report of

Performance Overview
Independent
Committees

Overview involving more serious breaches and The Disciplinary Committee currently

Group Overview
entailing more severe sanctions against comprises 14 members and the Appeals
SGXs systems to deal with listed issuers, directors and executive Committee comprises 7 members. The
self-regulatory organisation conflicts officers, issue managers, financial advisors Disciplinary Committee and Appeals
include the setting up of independent advising on reverse takeover applications, Committee members have legal,
committees to supplement its sponsors and registered professionals. accounting, corporate finance, market
regulatory and disciplinary processes. Sanctions the two committees can mete experience, as well as directorship
To ensure impartial and independent out include fines for issuers, prohibiting experience in SGX-listed issuers.
administration of their powers, the issuers from raising funds through
members of SGXs independent SGX for up to 3 years, requiring the The independent committees are
committees are not directors, officers resignation of directors or executive supported by the Office of the

Value Creation & Sustainability


or employees of SGX or its related officers and issuance of public Secretariat which manages the
corporations. reprimands. The transparency and processes of the independent
independence in the administration of committees meetings and hearings.
SGX undertook a major initiative to sanctions for listing rule breaches will The Office of the Secretariat is
supplement its listings regulatory be enhanced with these 2 committees. independent of the business and
process with the establishment of the regulation functions within SGX and
Listings Advisory Committee, Listings Aside from listing rule breaches heard the Head of the Office of the Secretariat
Disciplinary Committee and Listings by the Listings Disciplinary and Appeals reports directly to the Chairmen of the
Appeals Committee on 7 October 2015. Committees with members drawn from respective committees.
the Disciplinary and Appeals Committees

Governance
In addition to conflicts prevention, respectively, breaches of SGXs trading The operation of the Committees and
the establishment of the Listings and clearing rules will continue to be the Office of the Secretariat is funded
Advisory Committee also enables heard by the Disciplinary Committee separately by a newly established
SGX to draw upon the views of a panel and Appeals Committee. Compliance Fund, which is segregated
of independent and experienced market from the rest of SGXs monies. The
professionals. The Listings Advisory The Disciplinary Committee is able Compliance Fund comprises an annual
Committee provides advice on SGXs to impose a wide range of sanctions earmarked amount received by SGX
listing policies and Mainboard listing against trading or clearing members, from listing revenue. In FY2016, the
applications which involve novel their directors, trading representatives, operating costs of the Committees and
or unprecedented issues, or where approved traders, registered the Office of the Secretariat amounted
specialist expertise is required, or representatives, officers, employees to S$521,320.
which involve matters of public interest. or agents including reprimands, fines, Financials
The Listings Advisory Committee restrictions or conditions on activities,
currently has 16 members with legal, suspension, expulsion, revocation of Listings Advisory Committee
accounting, corporate finance authorisation, deregistration, requiring Annual Report
and market experience, and also persons to undertake an education or
includes representatives of the compliance program, ordering directors Note from the Listings Advisory
investment community. to relinquish their day-to-day roles and Committee Chairman
appointing a manager to manage a The Listings Advisory Committee (LAC)
The Listings Disciplinary Committee member's business. was established on 7 October 2015 by
and Listings Appeals Committee were SGX to supplement its listings regulatory
Others

established in conjunction with the The Appeals Committee hears appeals process in reviewing Mainboard listing
strengthening of the range of by SGX or the party facing the charge applications and formulating listing
enforcement actions which can be taken against the Disciplinary Committee policies. The LAC is well represented
for listing rule breaches, with the aim of decisions, and in the case of listing by 16 members with legal, accounting,
improving the governance and matters, the Listings Appeals Committee corporate finance and market
compliance standards of the listing space. additionally hears appeals against certain experience, and representatives of the
The Listings Disciplinary Committee and decisions of SGX. The decision of the investment community, all of whom
Listings Appeals Committee will hear and Appeals Committee or Listings Appeals are independent of SGX.
determine charges and appeals for cases Committee is final.
70 Singapore Exchange

Report of
Independent
Committees

Listing applications referred to the LAC had been set by the listing applicant. strengthen investor confidence and
can either be referred by SGX, or by me This is to ensure that the subsidiary of attract greater investor interest.
or the Deputy Chairman, Professor Tan the listing applicant would enjoy lower
Cheng Han, Senior Counsel, taking into tax rates under the applicable foreign The grounds of decision of LACs advice
account recommendations of the law. The Deputy Chairman had referred for the referral cases are available on
Secretariat. A listing application may be the case to the LAC as the forfeiture SGX's website.
referred to the LAC when novel issues mechanism was considered to be novel.
are involved, specialist expertise is
required, matters of public interest are Acknowledgements
involved or when SGX is of the view that Listing Policy Referral
a referral is appropriate. I wish to express my appreciation to the
A listing policy matter was referred to Deputy Chairman for his legal expertise
I am pleased to report on the LACs the LAC in April 2016. Following the and the other distinguished LAC
activities in the first nine months Companies Act amendment earlier this members for their valuable insights and
following its establishment. Between year removing the one-share-one-vote contributions during LAC meetings.
7 October 2015 and 30 June 2016, seven restriction in public companies, SGX
IPO listing applications were reviewed by sought the LACs advice on whether I would also like to extend my sincere
me and the Deputy Chairman, together companies with a dual class share thanks to the Secretariat team headed
with the Secretariat. Out of these seven structure should be permitted to list on by Ms Ng Ee San for their dedication and
IPO listing applications, one was referred SGX, and if so, the safeguards to be strong technical support in carrying out
to the LAC by SGX, and one was referred adopted. Given the long-term and research and analysis to facilitate the
to the LAC by the Deputy Chairman. As wide-ranging impact of allowing listing LACs discussions as well as organising
for the remaining five listing applications of dual class share structures, the LAC and managing LAC meetings efficiently.
which were found not to satisfy any of met once in March 2016 and again in
the criteria for referral to the LAC, we April 2016 to consider and render advice I look forward to the LACs work ahead
had where appropriate, recommended on the various propositions under the in the coming year. The LAC remains
prospectus disclosure on certain issues possible listing framework. committed to working together with
and provided general observations on SGX in improving the quality of
our expectations in reviewing cases After robust discussions, an Singapores capital market.
of a similar nature going forward. overwhelming majority of the LAC
members present voted in favour of
permitting dual class share structures Mr Gautam Banerjee
IPO Referral Cases to list on SGX, subject to various Listings Advisory Committee Chairman
corporate governance safeguards to
The two IPO listing applications mitigate the inherent risks of such a dual
referred to the LAC involved issuers class share structure.
with foreign operations.
The envisaged dual class share structure
The first referral case in November 2015 listing framework is intended to enhance
involved past bill financing activities SGXs attractiveness as a listing venue
undertaken by companies within the and to broaden and deepen Singapores
listing applicants group which did not capital market. Unlike many other
comply with foreign laws. SGX had countries, Singapore does not have a vast
referred the case to the LAC as it was of hinterland providing a continuous
the view that a referral was appropriate. pipeline of IPO-ready listing applicants.
The LAC understands the need for SGX
The second referral case in April 2016 to attract quality listings from both
involved the proposed establishment of a within and outside Singapore, including
mechanism allowing the listing applicant companies with a dual class share
to forfeit shares when a shareholders structure. Quality IPO listings, together
holdings exceeding a prescribed limit that with a well-regulated market will
Report of Independent Committees Annual Report 2016 71

Performance Overview
Listing Advisory Committee Members

Group Overview
The current members of the LAC are:
No. Name Position Title
1 Mr Gautam Banerjee Chairman Chairman, Blackstone Singapore Pte Ltd
Former Executive Chairman, PricewaterhouseCoopers Singapore
2 Professor Tan Cheng Han, Deputy Chairman, Centre for Law & Business, Faculty of Law, National University
Senior Counsel Chairman of Singapore
Board Member, Accounting and Corporate Regulatory Authority
Commission Member, Competition Commission Singapore
3 Mrs Fang Ai Lian Member Adviser, Far East Organisation

Value Creation & Sustainability


Former Managing Partner, Ernst & Young LLP
4 Mr David Gerald Member President and Chief Executive Officer, Securities Investors Association (Singapore)
5 Mr Subramaniam Iyer Member Founder and Director, S2K2 Advisory (operating as SmartKapital)
6 Mr Lionel Lee Member Group Chief Executive Officer and Managing Director, Ezra Holdings Limited
7 Mr Daryl Liew Member Co-Chairman, Advocacy Committee, CFA Society Singapore
Head, Portfolio Management, Singapore, REYL Singapore Pte Ltd
8 Mr Lim Chin Hu Member Managing Partner, Stream Global Pte Ltd
9 Mrs Margaret Lui Member Chief Executive Officer, Azalea Asset Management Pte Ltd
10 Mr Mak Lye Mun Member Country Head and Chief Executive Officer, CIMB Bank Berhad Singapore Branch

Governance
11 Mr Kabir Mathur Member Director, KKR Singapore Pte. Limited
12 Mr Ronald Ong Member Chairman and Chief Executive Officer, Southeast Asia, Morgan Stanley Asia
(Singapore) Pte.
13 Mr Soon Tit Koon Member Independent Director, Great Eastern Holdings Limited
Independent Director, SPH REIT Management Pte. Ltd.
14 Professor Hans Tjio Member Co-Director, Centre for Banking & Finance Law, National University of Singapore
Member, Securities Industry Council
15 Mr Toh Teng Peow David Member Director and Chief Technology Officer, Nanyang Technological University-NTUitive
Pte. Ltd.
16 Ms Tracey Woon Member Vice-Chairman, Asia Pacific, Wealth Management, UBS AG
Financials
Others
72 Singapore Exchange

Report of
Independent
Committees

Disciplinary and Appeals Committees Report Disciplinary Committee Members

Case heard in FY2016 During FY2016, two new members, namely Mr Eric Ang Teik Lim
On 28 June 2016, the Disciplinary Committee heard one case and Mr Lucas Tran were added to the Disciplinary Committee.
relating to breaches of the SGX-ST Rules by a trading
representative of a SGX-ST Trading Member arising from his Mr Eric Ang Teik Lim was appointed as co-chairman of the
acts which led to a false market in certain securities. The trading Disciplinary Committee and will chair Listings Disciplinary
representative was fined S$180,000 and suspended for six Committee hearings.
months. The grounds of decision of the case are available on
SGXs website.

In FY2016, no case was brought before the Appeals Committee.

The current members of the Disciplinary Committee are:


No. Name Position Title
1 Mr Eddie Tan Co-Chairman Corporate Regional Treasurer, Asia, Citibank N.A
2 Mr Eric Ang Teik Lim Co-Chairman Senior Executive Adviser, DBS Bank Ltd
3 Mr Hamidul Haq Deputy Chairman Partner, Rajah & Tann Singapore LLP
4 Mr Leong Mun Wai Deputy Chairman Chief Executive Officer, Wintop Capital Pte. Ltd.
5 Mr Hemant Bhatt Member Chief Executive Officer Downstream & Commercial, Golden Agri-Resources Ltd
6 Mr Paul Davies Member Former Managing Director, Goldman Sachs Futures Pte.
7 Mr Kan Shik Lum Member Independent Director, Mapletree Commercial Trust
8 Mr Lam Chee Kin Member Managing Director, Head of Legal, Compliance and Secretariat, DBS Bank Ltd
9 Mr Mah Kah Loon Member Managing Director and Head of Corporate and Investment Banking, Singapore,
CIMB Bank Berhad
10 Mr Francis Mok Lip Wee Member Partner, Allen & Gledhill LLP
11 Mr Colin Ng Teck Sim Member Executive Chairman and Partner, Colin Ng & Partners LLP
12 Mr Teyu Che Chern Member Chief Executive Officer, Phillip Futures Pte Ltd
13 Mr Lucas Tran Member Partner, Diversified Industrials & Infrastructure, KPMG LLP
14 Ms Yeoh Choo Guan Member Managing Director, UBS AG and Chief Executive Officer, UBS Securities Pte. Ltd.

Appeals Committee Members


During FY2016, one new member, Mr Michael Smith, was added to the Appeals Committee.

The current members of the Appeals Committee are:


No. Name Position Title
1 Mr Francis Xavier, Senior Counsel, PBM Chairman Regional Head, Dispute Resolution, Rajah & Tann Singapore LLP
2 Mr George Lee Member Adviser, OCBC Bank (M) Bhd
3 Mr Lim How Teck Member Chairman, Redwood International Pte Ltd
Chairman, Heliconia Capital Management Pte. Ltd.
Chairman, ARA-CWT Trust Management (Cache) Limited
Chairman, Swissco Holdings Limited
Chairman, NauticAWT Limited
4 Mr Quek Suan Kiat Member Director, Singapore Accountancy Commission
Director, Gardens by the Bay
Former Vice Chairman, Barclays Bank Plc Singapore Branch
5 Mr Michael Smith Member Managing Director,
Head, South East Asia,
Head, Asia Pacific Real Estate,
Goldman Sachs Singapore Pte.
6 Mr Michael Wong Ping Seng Member Director, Business Development, Phillip Securities Pte Ltd
7 Mr Hugh Young Member Managing Director, Aberdeen Asset Management Asia Limited
Annual Report 2016 73

Remuneration

Performance Overview
Report

The Remuneration & Staff Development Compensation Components Variable Compensation

Group Overview
Committee (RSDC) reviews and and Mix
recommends to the Board for approval Variable compensation comprises
matters concerning management An employees total compensation is cash-based short-term incentives and
development, succession planning and made up of the following components: share-based long-term incentives. The
remuneration of senior management award of variable compensation is
and employees and the remuneration approved by the RSDC and Management
Total compensation
of the Board. through a process where due
consideration is given to corporate and
The RSDC comprises the following individual performance in four broad
directors: categories of objectives, namely,
Fixed Variable

Value Creation & Sustainability


financial; business and functional;
Compensation Compensation
Mr Kwa Chong Seng regulatory and controls; and
Chairman organisational and people development,
Mr Chew Choon Seng as well as relevant comparative
Mr Liew Mun Leong Share-based remuneration in the market. In line
Cash-based
Mr Ng Kok Song Short-term incentives
Long-term incentives with the current regulatory standards,
(subject to plan criteria)
the control functions performance
objectives are based principally on the
Compensation Philosophy In alignment with current regulatory achievement of objectives for the
standards, the mix of fixed and variable functions, not directly linked to the

Governance
SGX adopts a compensation philosophy compensation for staff in Regulation, companys financial performance.
that is directed towards the attraction, Risk Management, CFOs Office, Human
retention and motivation of talent to Resources, Internal Audit and Legal, Each year, the RSDC evaluates the
achieve its business vision and create Compliance & Corporate Secretariat extent to which each of the senior
sustainable value for its shareholders. functions, collectively known as control management has delivered on the
Pay-for-performance is emphasised by functions, is weighted towards fixed corporate and individual objectives
linking total compensation to the compensation. The proportion of variable (details are not disclosed for strategic
achievement of organisational and or at risk compensation to the total and confidentiality reasons) and based
individual performance objectives, compensation increases with job grade on the evaluation, approves the
taking into consideration relevant seniority. At the senior management compensation for senior management
regulatory standards and comparative level, up to 50% of variable compensation and proposes the compensation for the
compensation in the market to maintain is deferred over a time period of three to CEO for the Boards approval. Financials
market competitiveness. four years in the form of share-based
long-term incentives.
With effect from 1 July 2015, the mix Short-term Incentives
of fixed and variable compensation for
employees was adjusted to align with the Fixed Compensation Short-term incentives take the form of an
remuneration mix in the financial services annual variable bonus for all employees
industry, arising from a comprehensive Fixed compensation comprises base excluding those participating in the sales
review of SGXs compensation salary, fixed allowances and an annual incentive plan, who will receive sales
framework to ensure greater alignment wage supplement. Base salary is pegged incentive payment based on achievement
Others

of its pay policies and practices with the to the 50th percentile of market pay data of sale targets. Each year, the RSDC
market and regulatory standards. Aon in the Singapore banking and financial reviews and approves the variable bonus
Hewitt (Singapore) Pte Ltd (Aon Hewitt) services industry. pool for distribution. The Management
consultants were engaged by the RSDC reviews and allocates variable bonus
to conduct the review. The annual salary review is in July of based on the individual performance
each year. The RSDC approves the salary of employees and their contributions
Aon Hewitt and its consultants are increment budget taking into account towards SGXs performance. The sales
independent and not related to any market trends and the profitability of incentive pool is generated by the
of our directors. SGX as a whole. achievement of sales targets and
74 Singapore Exchange

Remuneration
Report

distributed to employees based on the Total Incentives Funding


achievement of team and individual sales
targets and corporate objectives. The total incentives pool funds the annual variable bonus for all employees (excluding
those in control functions and on sales incentive plan) and the long-term incentive
plans. It is computed using the following formula:
Long-term Incentives
=
A percentage of [Profit before Variable Bonus
Total Incentives (TI) Pool
Long-term incentives (LTIs) create value less Corporate Tax less Cost of Equity]
for the company by aligning employees
long-term incentives to the achievement
of SGXs long-term results. Furthermore,
due to its time-based vesting The SGX Performance Restrictions
characteristic, it carries a retention Share Plan The total number of new SGX shares
element that strengthens SGXs ability which may be issued pursuant to awards
to reward and retain key employees. The SGX Performance Share Plan granted under the SGX PSP 2015 on any
is a share-based incentive scheme date, when added to the total number of
In alignment with current regulatory established with the objective new shares issued and issuable in respect
standards, LTIs may be clawed back in of rewarding, motivating, and of all awards granted under the SGX PSP
the event of exceptional circumstances of retaining key senior executives to 2015 (and/or any share schemes then in
misstatement of financial results or of optimise their performance standards. force), shall not exceed 10% of the total
misconduct resulting in financial or other Through the Plan, SGX will be able to number of SGXs issued shares (excluding
losses to the company. recognise and reward past contributions shares held by the company as treasury
and services, and motivate the plan shares) on the day preceding the relevant
There are two types of LTIs the SGX participants to continue to strive date of award.
Performance Share Plan and the SGX for SGXs long-term success.
Deferred Long-Term Incentives Scheme Participants of SGX PSP are required to
and the grants of which are made at the The SGX Performance Share Plan retain 50% of the total number of shares
discretion of the RSDC. For the senior (SGX PSP), after being in force for that are released to them for at least one
management, half of their deferred 10 years, expired on 21 September 2015. calendar year from the vesting date. The
variable compensation is granted in It was replaced by a new plan the SGX vesting period of SGX PSP 2015 has been
performance shares under the SGX Performance Share Plan 2015 (SGX PSP extended to four years (instead of three
Performance Share Plan and the 2015), which was approved for adoption years for SGX PSP) and with that any
remaining half in deferred shares under by the shareholders on 23 September 2015. shares that have been released by
the Deferred Long-Term Incentives participants under SGX PSP 2015 are
Scheme. The number of shares awarded On the recommendation of Mercer no longer subject to a retention period.
is determined using the valuation of the Singapore consultants, who were Unless otherwise decided by the RSDC,
shares based on one-month volume- engaged by the RSDC to review the the entitlement to this award is
weighted average prices of SGX Shares performance share plan framework, conditional on the plan participant
before the approval of awards. the performance targets under the remaining in service up to the specified
SGX PSP 2015 have been revised and vesting date.
the vesting period is extended by a year,
to four years. Eligibility
Selected members of senior
Mercer Singapore and its consultants are management who have attained the rank
independent and not related to any of of Vice President, job grade 2 and above
our directors. are eligible to participate in the plan.
Remuneration Report Annual Report 2016 75

Performance Overview
FY2013 to FY2016 Grants

Group Overview
The performance share awards will vest upon the achievement of respective performance targets over the performance period.
The performance targets were chosen as they are key financial measures that also drive alignment with shareholders interests.

Details of the performance share grants for FY2013 to FY2016 are as follows:

Summary of Grants
Grant Performance period Vesting Date Performance Targets
FY2013 1 July 2012 to 30 June 2015 1 September 2015 (1) ROE
FY2014 1 July 2013 to 30 June 2016 1 September 2016 (2) Absolute TSR
(3) Relative TSR against FTSE/MV TSR

Value Creation & Sustainability


FY2015 1 July 2014 to 30 June 2017 1 September 2017
FY2015 (A)* 1 July 2015 to 30 June 2018 1 September 2018 (Details in Table A)
FY2016 1 July 2015 to 30 June 2018 1 September 2019 (1) EPS growth
(2) Relative TSR against selected peers

(Details in Table B)
* Grant awarded to the former CEO, Mr Magnus Bcker on 30 June 2015 as part of his rewards for performance in FY2015.

Table A FY2013 to FY2015 Grants

+ +

Governance
ROE Absolute TSR* SGX TSR against FTSE/MV TSR
(Weight = 50%) (Weight = 25%) (Weight = 25%)
Payout Payout Payout
Performance Average (% of base Average (% of base Average (% of base
Level over 3FYs allocation) over 3FYs allocation) over 3FYs allocation)
Above Target 45.0% 150% 17.0% 150% 7.0% points 150%
At Target 40.0% 100% 13.0% 100% 4.5% points 100%
Threshold 35.0% 50% 10.0% 50% 2.0% points 50%
Below Threshold <35.0% Nil <10.0% Nil <2.0% points Nil
* Absolute TSR is benchmarked against the Cost of Equity of 10%.

Financials
Table B FY2016 Grant

+
EPS Growth Relative TSR against selected peers
(Weight = 50%) (Weight = 50%)
Payout Payout
3 FY (% of base Average (% of base
Performance Level CAGR (%) allocation) over 3FYs allocation)
Above Target 9.1% 150% 75th percentile of peers 150%
At Target 5.7% 100% 50th percentile of peers 100%
Others

Threshold 2.8% 50% 25th percentile of peers 50%


Below Threshold <2.8% Nil <25th percentile of peers Nil

The extent to which the performance share awards will vest could range from 0% to 150%, depending on the achievement of
performance targets in the respective performance periods. There shall be no award if the achievement falls below the threshold
performance level. For an achievement between the Threshold and Above Target performance levels, the payout percentage will be
pro-rated on a straight-line basis.
76 Singapore Exchange

Remuneration
Report

The SGX Deferred Long-Term The RSDC may decide to grant an award, conditional on the recipient remaining in
Incentives Scheme wholly or partly, in SGX shares or in cash service up to the specified vesting date.
(based on the market value of shares
The SGX Deferred Long-Term Incentives on vesting date) subject to a vesting Eligibility
Scheme (DLTIS) was approved by the schedule. Selected executives who have attained
RSDC in July 2006. the rank of Assistant Vice President and
The shares are vested in three equal above are eligible to be considered for
It recognises past contributions and instalments over a period of three years the award under the scheme.
services, and strengthens the Companys with the first instalment vesting one year
ability to reward and retain high- after grant date. Please refer to the Directors Statement
performing recipients whose on page 78 for the details of the share
contributions are essential to the Restrictions plans and grants to senior management
long-term growth of SGX. Unless otherwise decided by the RSDC, and staff.
the entitlement to the award is

Disclosure on Directors Remuneration

The table below shows the gross remuneration of the Executive Director of SGX for the financial year ended 30 June 2016.
Bonus for Long-term Total gross
FY20161, 2 incentives Benefits-in-kind Remuneration
Executive Director Fixed pay1 $ $ $ $
Mr Loh Boon Chye 1,171,790 2,005,100 25,078 3,201,968
1 Includes Employer CPF Contribution.
2 The bonus was determined by the Board after taking into account the achievement of specific quantitative and qualitative targets and objectives set for FY2016.

Please refer to the Corporate Governance Report on page 54 for the details of the Non-Executive Directors remuneration.

Disclosure on Five Top-Earning Executives Remuneration

The table below shows the gross remuneration of the five top-earning executives for the financial year ended 30 June 2016.
Bonus for Long-term Total gross
FY20161, 2 incentives3 Benefits-in-kind Remuneration
Executive Director Fixed pay1 $ $ $ $
Mr Muthukrishnan Ramaswami 508,284 903,900 682,135 3,484 2,097,803
Mr Chew Sutat 411,228 630,100 465,114 8,990 1,515,432
Mr Lawrence Wong 405,798 402,700 356,252 132,492 4 1,297,242
Mr Michael Syn 411,228 605,100 228,172 2,952 1,247,452
Mr Chng Lay Chew 582,288 391,400 224,007 3,194 1,200,889
1 Includes Employer CPF Contribution.
2 The bonuses for SGX senior management were determined by the RSDC after taking into account the achievement of the specific individual and organisational targets and
objectives set for FY2016.
3 Vesting of FY2013 PSP and DLTIS awards based on the fair value on grant date. The shares vested on 1 September 2015.
4 Includes allowances related to overseas posting.

Benefits

Benefits provided for employees are comparable with local market practices. These include medical, dental, and group insurances.
Annual Report 2016 77

Financials

Performance Overview
Group Overview
Value Creation & Sustainability
Governance
Contents
Financials Financials
Directors Statement 78
Independent Auditors Report 88
Statements of Comprehensive Income 93
Statements of Financial Position 94
Statements of Changes in Equity 95
Statement of Cash Flows 98
Notes to the Financial Statements 99
Others
78 Singapore Exchange

Directors Statement
For the financial year ended 30 June 2016

The directors present their statement to the shareholders together with the audited financial statements of Singapore
Exchange Limited (the Company or SGX) and its subsidiaries (the Group) for the financial year ended 30 June 2016.

In the opinion of the directors,

(a) the financial statements set out on pages 93 to 152 are drawn up so as to give a true and fair view of the financial
position of the Group and of the Company as at 30 June 2016 and the financial performance, changes in equity of the
Group and of the Company, and the cash flows of the Group for the financial year ended on that date; and

(b) at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as
and when they fall due.

Directors

The directors of the Company in office at the date of this statement are as follows:

Mr Chew Choon Seng (Chairman)


Mr Loh Boon Chye (Chief Executive Officer)
Mr Thaddeus Beczak
Ms Chew Gek Khim
Ms Lim Sok Hui (Mrs Chng Sok Hui) (Appointed on 1 December 2015)
Ms Jane Diplock AO
Mr Kwa Chong Seng
Mr Kevin Kwok
Mr Lee Hsien Yang
Mr Liew Mun Leong
Mr Ng Kok Song

Arrangements to enable directors to acquire shares and debentures

Neither at the end of nor at any time during the financial year was the Company a party to any arrangement whose object
was to enable the directors of the Company to acquire benefits by means of an acquisition of shares in, or debentures of, the
Company or any other body corporate, other than as disclosed under Share plans in this statement.

Directors interests in shares or debentures

(a) According to the register of directors shareholdings, none of the directors holding office at the end of the financial year
had any interest in the shares or debentures of the Company or its related corporations, except as follows:

Number of ordinary Number of ordinary shares


shares registered in which director
in name of is deemed
director or nominee to have an interest
At At At At
30.06.2016 01.07.2015 30.06.2016 01.07.2015
Singapore Exchange Limited
Mr Kwa Chong Seng 20,000 20,000
Mr Kevin Kwok 70,000 70,000 70,000 70,000

(b) According to the register of directors shareholdings, none of the directors holding office at the end of the financial year
had interests in the shares of the Company granted pursuant to SGX Performance Share Plan and SGX Deferred Long-
Term Incentives Scheme.

(c) There was no change in any of the abovementioned interests in the Company or in related corporations between the end
of the financial year and 21 July 2016.
Directors Statement Annual Report 2016 79

Share plans

Performance Overview
The Company offers the following share plans to its employees:

(a) SGX Performance Share Plan


(b) SGX Deferred Long-Term Incentives Scheme

All share plans are administered by the Remuneration & Staff Development Committee (RSDC).

(a) SGX Performance Share Plan


The SGX Performance Share Plan was adopted at an extraordinary general meeting of the Company held on

Group Overview
22 September 2005. The share plan known as SGX PSP commenced on the date of adoption and had expired on
21 September 2015. On 23 September 2015, the new share plan, SGX PSP 2015, was adopted to replace SGX PSP.

The SGX Performance Share Plan recognises and rewards past contributions and services, and motivates key senior
management to ensure the long-term success of the Company.

Eligibility
Selected senior management who have attained the rank of Vice President, job grade 2 and above are eligible to
participate in the SGX Performance Share Plan.

Value Creation & Sustainability


The RSDC may determine to grant a reward, wholly or partly, in the form of SGX shares, which will be free of charge,
or in the form of cash. The amount released, if in the form of cash, is based on the market value of such shares on
vesting date.

Unless otherwise decided by the RSDC, the entitlement to this award is conditional on the participant remaining in
service up to the specified vesting date.

Restrictions
The total number of new SGX shares which may be issued pursuant to awards granted under SGX PSP or SGX PSP 2015
on any date, when added to the total number of new shares issued and issuable in respect of all awards granted under
SGX PSP or SGX PSP 2015, shall not exceed 10% of SGXs issued share capital on the day preceding the relevant date

Governance
of award.

For grants under SGX PSP, participants are required to retain 50% of the total number of shares that are released to
them for at least one calendar year from the vesting date. As for grants under SGX PSP 2015, the vesting period has been
extended to four years (instead of three years) and with that, any shares that have been released to the participants are
no longer subject to a retention period.

Share grant and vesting


The RSDC approves all grants relating to SGX PSP and SGX PSP 2015, and has absolute discretion in the granting and
award of performance shares.
Financials
Others
80 Singapore Exchange

Share plans (continued)

(a) SGX Performance Share Plan (continued)


Share grant and vesting (continued)
(i) FY2013 Grant under SGX PSP
The number of SGX shares to be awarded to each participant will be based on the achievement of certain prescribed
performance targets, over a three-year performance period from 1 July 2012 to 30 June 2015. The performance shares
vested on 1 September 2015 and were fulfilled by the delivery of shares previously purchased from the market.

The details of shares granted to the participants are as follows:

Shares Balance Shares Shares Balance


Participants (as defined under SGX granted at as at lapsed during vested during as at
Performance Share Plan) grant date 01.07.2015 financial year financial year (1) 30.06.2016
Executive Management Committee
(EMCO) members
Mr Muthukrishnan Ramaswami (3) 69,000 69,000 (26,100) (42,900)
Mr Chew Sutat (3) 45,600 45,600 (17,200) (28,400)
Mr Syn Hsien-Min Michael 17,800 17,800 (6,700) (11,100)
Mr Chng Lay Chew 15,900 15,900 (6,000) (9,900)
Mr Arulraj Maria Devadoss 15,900 15,900 (6,000) (9,900)
Ms Agnes Koh (4) 19,100 19,100 (7,200) (11,900)

Other staff 200,000 200,000 (75,700) (124,300)

Other participants
Mr Magnus Bcker (3)(7) 174,500 174,500 (66,000) (108,500)
Ms Yeo Lian Sim (3)(9) 48,800 48,800 (18,400) (30,400)
Mr Robert Ian Caisley (6) 33,700 33,700 (12,700) (21,000)
Mr Benjamin Foo (10) 31,700
Mr Richard Teng Wee Chen (8) 30,000
702,000 640,300 (242,000) (398,300)

Refer to footnotes on page 83.

(ii) FY2014 Grant under SGX PSP


The number of SGX shares to be awarded to each participant will be based on the achievement of certain prescribed
performance targets, over a three-year performance period from 1 July 2013 to 30 June 2016. The performance
shares will vest on 1 September 2016.

The details of shares granted to the participants are as follows:

Shares Balance Shares Balance


Participants (as defined under SGX granted at as at lapsed during as at
Performance Share Plan) grant date 01.07.2015 financial year 30.06.2016 (2)
EMCO members
Mr Muthukrishnan Ramaswami (3) 68,300 68,300 68,300
Mr Chew Sutat (3) 48,300 48,300 48,300
Mr Chng Lay Chew (3) 38,500 38,500 38,500
Mr Syn Hsien-Min Michael 28,000 28,000 28,000
Mr Arulraj Maria Devadoss 24,500 24,500 24,500
Ms Agnes Koh (4) 18,100 18,100 18,100

Other staff 226,400 214,500 214,500

Other participants
Mr Magnus Bcker (3)(7) 161,100 161,100 161,100
Ms Yeo Lian Sim (3)(9) 45,500 45,500 45,500
Mr Robert Ian Caisley (6) 35,000 35,000 (35,000)
Mr Richard Teng Wee Chen (8) 31,500
Mr Timothy Utama (5) 28,700 28,700 (28,700)
753,900 710,500 (63,700) 646,800

Refer to footnotes on page 83.


Directors Statement Annual Report 2016 81

(iii) FY2015 Grants under SGX PSP

Performance Overview
There were two grants in FY2015. The first grant of 687,300 SGX shares was granted on 15 August 2014. The number
of SGX shares to be awarded to each participant will be based on the achievement of certain prescribed performance
targets, over a three-year performance period from 1 July 2014 to 30 June 2017. The second grant of 124,300 SGX
shares was granted to Mr Magnus Bcker on 30 June 2015. The number of SGX shares to be awarded will be based
on the achievement of certain prescribed performance targets, over a three-year performance period from 1 July
2015 to 30 June 2018. The performance shares of the first grant and second grant will vest on 1 September 2017 and
1 September 2018 respectively.

The details of shares granted to the participants are as follows:

Group Overview
Shares Balance Shares Balance
Participants (as defined under SGX granted at as at lapsed during as at
Performance Share Plan) grant date 01.07.2015 financial year 30.06.2016 (2)
EMCO members
Mr Muthukrishnan Ramaswami (3) 61,200 61,200 61,200
Mr Chew Sutat (3) 43,200 43,200 43,200
Mr Chng Lay Chew 34,200 34,200 34,200
Mr Syn Hsien-Min Michael 27,400 27,400 27,400
Mr Arulraj Maria Devadoss 21,600 21,600 21,600
Ms Agnes Koh (4) 15,300 15,300 15,300

Value Creation & Sustainability


Other staff 237,900 237,900 237,900

Other participants
Mr Magnus Bcker (3)(7) 268,400 268,400 268,400
Mr Timothy Utama (3)(5) 45,000 45,000 (45,000)
Mr Robert Ian Caisley (6) 31,500 31,500 (31,500)
Mr Richard Teng Wee Chen (8) 25,900
811,600 785,700 (76,500) 709,200

Refer to footnotes on page 83.

Governance
(iv) FY2016 Grant under SGX PSP 2015
The number of SGX shares to be awarded to each participant will be based on the achievement of certain prescribed
performance targets, over a three-year performance period from 1 July 2015 to 30 June 2018. The performance
shares will vest on 1 September 2019.

The details of shares granted to the participants are as follows:

Shares
granted Shares Balance
Participants (as defined under SGX during the lapsed during as at
Financials
Performance Share Plan) financial year financial year 30.06.2016 (2)
EMCO members
Mr Muthukrishnan Ramaswami (3) 53,600 53,600
Mr Chew Sutat (3) 37,800 37,800
Mr Syn Hsien-Min Michael (3) 34,700 34,700
Mr Chng Lay Chew 22,800 22,800
Ms Agnes Koh 15,100 15,100
Mr Arulraj Maria Devadoss 14,200 14,200

Other staff 277,800 277,800


Others

Other participants
Mr Timothy Utama (3)(5) 31,500 (31,500)
487,500 (31,500) 456,000

Refer to footnotes on page 83.


82 Singapore Exchange

Share plans (continued)

(a) SGX Performance Share Plan (continued)


Share grant and vesting (continued)
(v) Summary of SGX Performance Share Plan under SGX PSP
The summary of the total number of shares granted, lapsed, vested and outstanding as at 30 June 2016 are
as follows:

Aggregate Aggregate Aggregate


shares shares shares
granted since lapsed since vested since
commencement commencement commencement
of SGX of SGX of SGX Aggregate
Shares Performance Performance Performance shares
granted during Share Plan to Share Plan to Share Plan to outstanding as
financial year 30.06.2016 30.06.2016 30.06.2016 at 30.06.2016
Participants who received
more than 5% of the total
grants available

Mr Hsieh Fu Hua (13) 2,712,485 (676,900) (2,035,585)


Mr Magnus Bcker (7) 1,149,300 (419,400) (300,400) 429,500
Mr Gan Seow Ann (11) 902,100 (357,500) (544,600)
Ms Yeo Lian Sim (9) 855,700 (307,700) (502,500) 45,500
Mr Seck Wai Kwong (12) 845,600 (335,900) (509,700)
Mr Muthukrishnan Ramaswami 698,500 (362,100) (206,900) 129,500

Participants who received


less than 5% of the total
grants available

Other staff 6,662,850 (3,027,700) (2,883,650) 751,500


13,826,535 (5,487,200) (6,983,335) 1,356,000

Refer to footnotes on page 83.

(vi) Summary of SGX Performance Share Plan under SGX PSP 2015
The summary of the total number of shares granted, lapsed, vested and outstanding as at 30 June 2016 are
as follows:

Aggregate Aggregate Aggregate


shares shares shares
granted since lapsed since vested since
commencement commencement commencement
of SGX of SGX of SGX Aggregate
Shares Performance Performance Performance shares
granted during Share Plan to Share Plan to Share Plan to outstanding as
financial year 30.06.2016 30.06.2016 30.06.2016 at 30.06.2016
Participants who received
more than 5% of the total
grants available

Mr Muthukrishnan Ramaswami 53,600 53,600 53,600


Mr Chew Sutat 37,800 37,800 37,800
Mr Syn Hsien-Min Michael 34,700 34,700 34,700
Mr Timothy Utama (5) 31,500 31,500 (31,500)

Participants who received


less than 5% of the total
grants available

Other staff 329,900 329,900 329,900


487,500 487,500 (31,500) 456,000

Refer to footnotes on page 83.


Directors Statement Annual Report 2016 83

No shares were granted to employees of Associated Company (as defined under the SGX Performance Share Plan)

Performance Overview
since the commencement of SGX Performance Share Plan.

The number of shares vested during the financial year represents the level of achievement against the performance conditions. Overall
(1)

achievement for the grant was 62.2%. The number of shares vested to each participant is rounded to the nearest hundred shares.

Represents the number of shares required if participants are to be awarded at 100% of the grant. However, the shares to be awarded at the
(2)

vesting date may range from 0% to 150% of the grant, depending on the level of achievement against the performance conditions.

Received more than 5% of the shares granted.


(3)

Ms Agnes Koh was appointed as a member of EMCO with effect from 1 July 2015. Her shares were previously grouped under Other staff.
(4)

Mr Timothy Utama resigned as SGXs Chief Operations and Technology Officer and his last day of service was 31 March 2016. All his unvested
(5)

Group Overview
shares lapsed at the end of his employment.

Mr Robert Ian Caisley resigned as SGXs Chief Information Officer and his last day of service was 31 December 2015. All his unvested shares
(6)

lapsed at the end of his employment.

Mr Magnus Bckers contract as the Chief Executive Officer ended on 30 June 2015. Under his contract, he will continue to be eligible to
(7)

receive the grant at the vesting date, subject to the level of achievement against the performance conditions.

Mr Richard Teng Wee Chen resigned as SGXs Chief Regulatory Officer and his last day of service was 28 February 2015. All his unvested
(8)

shares lapsed at the end of his employment.

Ms Yeo Lian Sim retired from her position as SGXs Chief Regulatory & Risk Officer and her last day of service was 31 December 2013. As
(9)

approved by the RSDC, she will continue to be eligible to receive the grant at the vesting date, subject to the level of achievement against the

Value Creation & Sustainability


performance conditions.

(10)
Mr Benjamin Foo resigned as SGXs Head of Operations and his last day of service was 11 January 2013. All his unvested shares lapsed at the
end of his employment.

(11)
Mr Gan Seow Ann resigned as SGXs Co-President and his last day of service was 26 May 2012. All his unvested shares lapsed at the end of
his employment.

(12)
Mr Seck Wai Kwong resigned as SGXs Chief Financial Officer and his last day of service was 10 June 2011. All his unvested shares lapsed at
the end of his employment.

(13)
Mr Hsieh Fu Hua was SGXs former Chief Executive Officer and his contract ended on 30 November 2009.

Governance
(b) SGX Deferred Long-Term Incentives Scheme
The SGX Deferred Long-Term Incentives Scheme was approved by the RSDC in July 2006. It recognises past
contributions and services, and strengthens the Companys ability to reward and retain high-performing executives
and key senior employees.

Eligibility
Selected executives who have attained the rank of Assistant Vice President and above are eligible to be considered for
the award under the SGX Deferred Long-Term Incentives Scheme.

Financials
The RSDC may determine to grant an award, wholly or partly, in the form of SGX shares, which will be free of charge,
or in the form of cash. The amount released, if in the form of cash, is based on the market value of such shares on
vesting date.

Unless otherwise decided by the RSDC, the entitlement to the award is conditional on the Recipient remaining in service
up to the specified vesting date.
Others
84 Singapore Exchange

Share plans (continued)

(b) SGX Deferred Long-Term Incentives Scheme (continued)


Share award and vesting
(i) FY2013 Award
The FY2013 Award was in the form of SGX shares and the award vested in three equal instalments over a period of
three years. The first instalment of this award vested on 2 September 2013 and the final instalment vested on
1 September 2015.

The details of shares awarded are as follows:

Shares Balance Shares Balance


Recipients (as defined under SGX awarded at as at vested during as at
Deferred Long-Term Incentives Scheme) grant date 01.07.2015 financial year 30.06.2016
EMCO members
Mr Muthukrishnan Ramaswami (1) 69,000 23,000 (23,000)
Mr Chew Sutat 45,600 15,200 (15,200)
Mr Syn Hsien-Min Michael 17,800 5,934 (5,934)
Ms Agnes Koh (2) 19,100 6,368 (6,368)

Other staff 574,200 171,000 (171,000)

Other recipients
Mr Magnus Bcker (1)(5) 174,500 58,168 (58,168)
Ms Yeo Lian Sim (7) 48,800 16,268 (16,268)
Mr Robert Ian Caisley (4) 33,700 11,234 (11,234)
Mr Benjamin Foo (8) 31,700
Mr Richard Teng Wee Chen (6) 30,000
Total 1,044,400 307,172 (307,172)

Refer to footnotes on page 86.

(ii) FY2014 Award


The FY2014 Award was in the form of SGX shares. The award will vest in three equal instalments over a period of
three years with the first instalment vested on 1 September 2014.

The details of shares awarded are as follows:

Shares Balance Shares Shares Balance


Recipients (as defined under SGX awarded at as at lapsed during vested during as at
Deferred Long-Term Incentives Scheme) grant date 01.07.2015 financial year financial year 30.06.2016
EMCO members
Mr Muthukrishnan Ramaswami (1) 68,300 45,534 (22,766) 22,768
Mr Chew Sutat 48,300 32,200 (16,100) 16,100
Mr Chng Lay Chew 38,500 25,667 (12,833) 12,834
Mr Syn Hsien-Min Michael 28,000 18,667 (9,333) 9,334
Mr Arulraj Maria Devadoss 24,500 16,334 (8,166) 8,168
Ms Agnes Koh (2) 18,100 12,067 (6,033) 6,034

Other staff 696,000 417,694 (1,300) (208,806) 207,588

Other recipient
Mr Magnus Bcker (1)(5) 161,100 107,400 (53,700) 53,700
Ms Yeo Lian Sim (7) 45,500 30,334 (15,166) 15,168
Mr Robert Ian Caisley (4) 35,000 23,334 (11,668) (11,666)
Mr Richard Teng Wee Chen (6) 31,500
Mr Timothy Utama (3) 28,700 19,134 (9,566) 9,568
Total 1,223,500 748,365 (12,968) (374,135) 361,262

Refer to footnotes on page 86.


Directors Statement Annual Report 2016 85

(iii) FY2015 Award

Performance Overview
There were two awards in FY2015 in the form of SGX shares. The first award of 1,159,500 shares was awarded on
15 August 2014 which will vest in three equal instalments over a period of three years with the first instalment
vested on 1 September 2015. The second award of 124,300 SGX shares was awarded to Mr Magnus Bcker on
30 June 2015 which will vest in three equal instalments over a period of three years with the first instalment
vesting on 1 September 2016.

The details of shares awarded are as follows:

Shares Balance Shares Shares Balance


Recipients (as defined under SGX awarded at as at lapsed during vested during as at
Deferred Long-Term Incentives Scheme) grant date 01.07.2015 financial year financial year 30.06.2016

Group Overview
EMCO members
Mr Muthukrishnan Ramaswami 61,200 61,200 (20,400) 40,800
Mr Chew Sutat 43,200 43,200 (14,400) 28,800
Mr Chng Lay Chew 34,200 34,200 (11,400) 22,800
Mr Syn Hsien-Min Michael 27,400 27,400 (9,133) 18,267
Mr Arulraj Maria Devadoss 21,600 21,600 (7,200) 14,400
Ms Agnes Koh (2) 15,300 15,300 (5,100) 10,200

Other staff 710,100 684,900 (2,600) (228,264) 454,036

Value Creation & Sustainability


Other recipient
Mr Magnus Bcker (1)(5) 268,400 268,400 (48,033) 220,367
Mr Timothy Utama (3) 45,000 45,000 (15,000) 30,000
Mr Robert Ian Caisley (4) 31,500 31,500 (21,000) (10,500)
Mr Richard Teng Wee Chen (6) 25,900
Total 1,283,800 1,232,700 (23,600) (369,430) 839,670

Refer to footnotes on page 86.

(iv) FY2016 Award

Governance
The FY2016 Award was in the form of SGX shares. The award will vest in three equal instalments over a period of
three years with the first instalment vesting on 1 September 2016.

The details of shares awarded are as follows:

Shares Shares Balance


Recipients (as defined under SGX awarded during lapsed during as at
Deferred Long-Term Incentives Scheme) financial year financial year 30.06.2016
EMCO members
Mr Muthukrishnan Ramaswami (1) 53,600 53,600
Mr Chew Sutat 37,800 37,800
Mr Chng Lay Chew 22,800 22,800 Financials
Mr Syn Hsien-Min Michael 34,700 34,700
Mr Arulraj Maria Devadoss 14,200 14,200
Ms Agnes Koh 15,100 15,100

Other staff 719,700 (7,200) 712,500

Other recipient
Mr Timothy Utama (3) 31,500 31,500
Mr Robert Ian Caisley (4) 26,800 (26,800)
Others

Total 956,200 (34,000) 922,200

Refer to footnotes on page 86.


86 Singapore Exchange

Share plans (continued)

(b) SGX Deferred Long-Term Incentives Scheme (continued)


Share grant and vesting (continued)
(v) Summary of SGX Deferred Long-Term Incentives Scheme
The summary of the total number of shares awarded, lapsed, vested and outstanding as at 30 June 2016 are as
follows:

Aggregate Aggregate Aggregate


shares shares shares
awarded since lapsed since vested since
commencement commencement commencement
of SGX Deferred of SGX Deferred of SGX Deferred
Long-Term Long-Term Long-Term Aggregate
Shares Incentives Incentives Incentives shares
awarded during Scheme to Scheme to Scheme to outstanding as
financial year 30.06.2016 30.06.2016 30.06.2016 at 30.06.2016
Recipient who received
more than 5% of the total
awards available

Mr Magnus Bcker (5) 604,000 (329,933) 274,067

Recipients who received


less than 5% of the total
awards available

Other staff 956,200 6,255,300 (666,143) (3,740,092) 1,849,065


956,200 6,859,300 (666,143) (4,070,025) 2,123,132

Received more than 5% of the shares awarded.


(1)

Ms Agnes Koh was appointed as a member of EMCO with effect from 1 July 2015. Her shares were previously grouped under Other staff.
(2)

Mr Timothy Utama resigned as SGXs Chief Operations and Technology Officer and his last day of service was 31 March 2016. As approved by
(3)

the RSDC, he will continue to be eligible to receive the award at the vesting date.

Mr Robert Ian Caisley resigned as SGXs Chief Information Officer and his last day of service was 31 December 2015. All his unvested shares
(4)

lapsed at the end of his employment.

Mr Magnus Bckers contract as the Chief Executive Officer ended on 30 June 2015. Under his contract, he will continue to be eligible to
(5)

receive the award at the vesting date.

Mr Richard Teng Wee Chen resigned as SGXs Chief Regulatory Officer and his last day of service was 28 February 2015. All his unvested
(6)

shares lapsed at the end of his employment.

Ms Yeo Lian Sim retired from her position as SGXs Chief Regulatory & Risk Officer and her last day of service was 31 December 2013. As
(7)

approved by the RSDC, she will continue to be eligible to receive the award at the vesting date.

Mr Benjamin Foo resigned as SGXs Head of Operations and his last day of service was 11 January 2013. All his unvested shares lapsed at the
(8)

end of his employment.


Directors Statement Annual Report 2016 87

Audit Committee

Performance Overview
The Audit Committee comprises the following Non-Executive Directors at the date of this statement:

Mr Kevin Kwok (Chairman)


Ms Jane Diplock AO
Mr Lee Hsien Yang
Mr Liew Mun Leong

Based on the criteria prescribed in both the Securities and Futures (Corporate Governance of Approved Exchanges, Approved
Clearing Houses and Approved Holding Companies) Regulations 2005 (SFR 2005) and the Code of Corporate Governance 2012
(CCG 2012), all the Audit Committee members, except Lee Hsien Yang, are independent.

Group Overview
The Audit Committee carried out its functions in accordance with Section 201B(5) of the Singapore Companies Act, Regulation
14(2) of the SFR 2005, the CCG 2012, and the SGX-ST Listing Manual. These functions include a review of the financial
statements of the Company and of the Group for the financial year and the independent auditors report thereon.

Accordingly, the Audit Committee has also undertaken a review of the nature and extent of non-audit services provided by
the firm acting as the auditor. In the opinion of the Audit Committee, these services would not affect the independence of the
auditor.

The Audit Committee has recommended to the Board that the independent auditor, PricewaterhouseCoopers LLP be
nominated for re-appointment at the forthcoming Annual General Meeting.

Value Creation & Sustainability


In appointing the auditor of the Company and the subsidiaries, the Group has complied with Rule 712 and Rule 715 of the
SGX-ST Listing Manual. The Group has no significant associated company.

Independent auditor

The independent auditor, PricewaterhouseCoopers LLP, has expressed its willingness to accept re-appointment.

On behalf of the directors

Governance
Mr Chew Choon Seng Mr Loh Boon Chye
Director Director

27 July 2016

Financials
Others
88 Singapore Exchange

Independent Auditors
Report
To the Members of Singapore Exchange Limited

Report on the Audit of the Financial Statements

Opinion
In our opinion, the accompanying financial statements of Singapore Exchange Limited (the Company) and its subsidiaries (the
Group) are properly drawn up in accordance with the provisions of the Companies Act, Chapter 50 (the Act) and Financial
Reporting Standards in Singapore (FRSs) so as to give a true and fair view of the financial position of the Group and of the
Company as at 30 June 2016, and of the financial performance and changes in equity of the Group and the Company, and the
cash flows of the Group, for the financial year ended on that date.

What we have audited


The financial statements of the Group and of the Company, as set out on page 93 to 152, comprise:

the statements of comprehensive income of the Group and of the Company for the year ended 30 June 2016;
the statements of financial position of the Group and of the Company as at 30 June 2016;
the statements of changes in equity of the Group and of the Company for the year then ended;
the statement of cash flows of the Group for the year then ended; and
the notes to the financial statements, including a summary of significant accounting policies.

Basis for Opinion


We conducted our audit in accordance with Singapore Standards on Auditing (SSAs). Our responsibilities under those
standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence
We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority (ACRA) Code
of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code) together with the ethical
requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the ACRA Code.

Our Audit Approach


Overview

Materiality The overall group materiality that we used amounted to $20 million (rounded down to
the nearest million), which represents 5% of profit before tax for the financial year ended
30 June 2016. In determining materiality, both quantitative and qualitative factors were
considered.

Audit Scope Audit procedures were performed over the complete financial information of the Company
and the subsidiaries that are significant to the Group (significant components).

Key audit matters Valuation of available-for-sale financial asset


Impairment assessment of goodwill and intangible asset
Independent Auditors Report Annual Report 2016 89

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF SINGAPORE EXCHANGE LIMITED

Performance Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial
statements. In particular, we considered where management made subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in
all of our audits, we also addressed the risk of management override of internal controls, including among other matters,
consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance
whether the financial statements are free from material misstatement due to fraud or error. Misstatements are considered
material if individually, or in aggregate, they could reasonably be expected to influence the economic decisions of users taken

Group Overview
on the basis of the financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial statements as
a whole. We determined overall group materiality for the Group financial statements as a whole to be $20 million (rounded
down to the nearest million), being 5% of profit before tax. We chose profit before tax as the benchmark because, in our view,
it reflects the underlying performance of the Group and it is one of the benchmarks that is commonly used by the users of
financial statements in evaluating the performance of the Group. In performing our audit, we allocated materiality levels, which
are less than the overall group materiality, to the significant components.

Value Creation & Sustainability


We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $1 million
as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.

Audit Scope
We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial
statements as a whole, taking into account the structure of the Group, the industry in which the Group operates, and the
accounting processes and controls. The Groups financial reporting process is dependent on its IT systems. Our audit scope
included testing the operating effectiveness of the controls over the integrity of key financial data processed through the IT
systems that are relevant to financial reporting.

Governance
We audited the complete financial information of the Company and each of the significant components. This, together with the
audit procedures performed at the Group level over group consolidation, goodwill, intangible asset, taxation and disclosures in
the financial statements, gave us the evidence we needed for our opinion on the financial statements as a whole.

Key Audit Matters


Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements for the financial year ended 30 June 2016 due to the judgement and subjectivity involved. These matters were
addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not
express or provide a separate opinion on these matters.

Financials
Others
90 Singapore Exchange

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF SINGAPORE EXCHANGE LIMITED

Key Audit Matter How our audit addressed the key audit matter

Valuation of available-for-sale financial asset


As at 30 June 2016, the available-for-sale financial asset We evaluated the reasonableness of managements
was stated at $44,956,000. This relates to an investment estimate of expected future cash flows by taking into
in unlisted equity securities of BSE Limited (BSE). The fair consideration the historical trends, and expected growth
value of the available-for-sale financial asset as at 30 June of the Indian equity market and BSEs projected financial
2016 was determined using the discounted cash flow (DCF) performance. With the assistance of our valuation
model. specialists, we assessed the reasonableness of the long term
growth rate and the discount rate used by management. We
We focused on this area due to the size of the carrying found the estimate of expected futures cash flows and the
amount of the available-for-sale financial asset, and the rates used to be reasonable.
degree of judgement required in determining the fair value.
The use of DCF model involves significant judgements on We evaluated managements sensitivity analysis to assess
the expected future cash flows, long term growth rate, and the impact on the estimated fair value of available-for-
discount rate. sale financial asset by reasonable possible changes to the
long term growth rate and discount rate. We found the
Refer to Note 3 Critical accounting estimates and judgments, sensitivity analysis to be appropriate.
Note 16 Available-for-sale financial asset and Note 39
Financial risk management for the disclosures relating to the
valuation of the available-for-sale financial asset.

Impairment assessment of goodwill and intangible asset


As at 30 June 2016, the goodwill and intangible asset arising We evaluated the reasonableness of managements estimate
from the acquisition of Energy Market Company Pte Ltd of expected future cash flows by taking into consideration
(EMC) amounted to $9,614,000 and $25,556,000 respectively. the past performance, and projections of electricity demand
growth in Singapore and market developments.
The Groups goodwill and intangible asset relate to the EMC
cash-generating unit (CGU). Management is required to With the assistance of our valuation specialists, we assessed
perform an impairment assessment of goodwill annually and the reasonableness of the long term growth rate and the
assess whether there is any indication that the intangible discount rate used by management. We found the estimate
asset may be impaired. The recoverable amount of the of expected future cash flows and the rates used to be
CGU is compared with the carrying amount of the CGU to reasonable.
determine whether there is any impairment loss.
We performed sensitivity analysis to assess the impact on
We focused on this area because of the significant the recoverable amount of the CGU by reasonable possible
judgements required in estimating the expected future cash changes to the long term growth rate and discount rate.
flows, long term growth rate and discount rate. We found that changes in these rates did not result in
impairment loss.
Refer to Note 3 Critical accounting estimates and
judgments, Note 19 Intangible asset and Note 20
Goodwill for disclosures relating to the impairment
assessment.
Independent Auditors Report Annual Report 2016 91

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF SINGAPORE EXCHANGE LIMITED

Performance Overview
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the
provisions of the Act and FRSs, and for devising and maintaining a system of internal accounting controls sufficient to provide
reasonable assurance that assets are safeguarded against loss from unauthorised use of disposition; and transactions are
properly authorised and that they are recorded as necessary to permit the preparation of true and fair financial statements
and to maintain accountability of assets.

In preparing the financial statements, management is responsible for assessing the Groups ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

Group Overview
The directors responsibilities include overseeing the Groups financial reporting process.

Auditors Responsibilities for the Audit of the Financial Statements


Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism

Value Creation & Sustainability


throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design
and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Groups internal
control.

Governance
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.

Conclude on the appropriateness of managements use of going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Groups ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditors report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and Financials
whether the financial statements represent the underlying transactions and events in a manner that achieves fair
presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the Group to express an opinion on the financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
Others
92 Singapore Exchange

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF SINGAPORE EXCHANGE LIMITED

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide directors with a statement that we have complied with relevant ethical requirements regarding independence,
and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the
audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters
in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare
circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements


In our opinion, the accounting and other records required by the Act to be kept by the Company and by those subsidiary
corporations incorporated in Singapore of which we are the auditors have been properly kept in accordance with the
provisions of the Act.

The engagement partner on the audit resulting in this independent auditors report is Mrs Deborah Ong (Ms Deborah Tan Yang Sock).

PricewaterhouseCoopers LLP
Public Accountants and Chartered Accountants

Singapore, 27 July 2016


Statements of Comprehensive Income Annual Report 2016 93

Statements of

Performance Overview
Comprehensive Income
For the financial year ended 30 June 2016

The Group The Company

Group Overview
Note 2016 2015 2016 2015
$000 $000 $000 $000
Operating revenue
Equities and Fixed Income 4 405,763 401,552 11,465 11,084
Derivatives 4 325,304 295,791
Market Data and Connectivity 4 87,042 81,174 16,966 14,434
Management fees from subsidiaries 201,079 191,579
Dividends from subsidiaries 450,000 253,000
Operating revenue 818,109 778,517 679,510 470,097

Operating expenses

Value Creation & Sustainability


Staff 5 159,262 149,953 115,966 114,353
Technology 6 127,846 115,911 61,236 54,192
Processing and royalties 58,280 46,891 557 433
Premises 7 24,734 22,642 19,980 18,095
Professional fees 10,882 13,260 7,856 9,741
Others 8 27,965 28,025 14,646 14,619
Operating expenses 408,969 376,682 220,241 211,433

Operating profit 9 409,140 401,835 459,269 258,664


Other gains - net 10 5,709 7,811 1,999 2,945

Profit before tax and share of results of

Governance
associated company 414,849 409,646 461,268 261,609
Share of results of associated company 23 1,112 1,903

Profit before tax 415,961 411,549 461,268 261,609


Tax 25 (66,944) (62,937) (855) (2,839)
Net profit after tax 349,017 348,612 460,413 258,770

Attributable to:
Equity holders of the Company 349,017 348,612 460,413 258,770

Earnings per share based on net profit attributable to the equity


holders of the Company (in cents per share)
Basic 11 32.6 32.6 Financials
Diluted 11 32.5 32.5

The Group The Company


Note 2016 2015 2016 2015
$000 $000 $000 $000
Net profit after tax 349,017 348,612 460,413 258,770

Other comprehensive income


Items that may be reclassified subsequently to profit or loss:
Net currency translation differences of financial statements of
Others

subsidiary and associated company 25(e) (490) 210


Fair value gains/(losses) arising from cash flow hedges 25(e) 2,006 (245) (71) 71

Other comprehensive income/(expense) for the


financial year, net of tax 1,516 (35) (71) 71

Total comprehensive income for the financial year 350,533 348,577 460,342 258,841

Total comprehensive income attributable to:


Equity holders of the Company 350,533 348,577 460,342 258,841
94 Singapore Exchange

Statements of
Financial Position
For the financial year ended 30 June 2016

The Group The Company


Note 2016 2015 2016 2015
$000 $000 $000 $000
Assets
Current assets
Cash and cash equivalents 12 866,306 849,902 440,725 436,437
Trade and other receivables 13 929,981 653,508 16,587 14,996
Derivative financial instruments 15 2,665 311 86
1,798,952 1,503,721 457,312 451,519

Non-current assets
Available-for-sale financial asset 16 44,956 50,956 44,956 50,956
Property, plant and equipment 17 62,030 61,169 46,765 52,395
Software 18 154,702 139,977 32,049 29,735
Intangible asset 19 25,556 26,462
Goodwill 20 9,614 9,614
Club memberships 287 287 287 287
Investments in subsidiaries 22 614,490 534,990
Investment in associated company 23 9,387 9,426 4,389 4,389
306,532 297,891 742,936 672,752

Total assets 2,105,484 1,801,612 1,200,248 1,124,271

Liabilities
Current liabilities
Trade and other payables 24 1,012,652 718,326 370,892 419,115
Derivative financial instruments 15 66 84
Taxation 25 75,262 76,802 5,174 2,714
Provisions 26 9,775 9,433 6,677 6,172
1,097,755 804,645 382,743 428,001

Non-current liabilities
Trade and other payables 24 312 1,807
Deferred tax liabilities 25 17,836 18,764 3,928 5,687
18,148 20,571 3,928 5,687

Total liabilities 1,115,903 825,216 386,671 433,688

Net assets 989,581 976,396 813,577 690,583

Equity
Capital and reserves attributable to the
Companys equity holders
Share capital 27 426,445 428,568 426,445 428,568
Treasury shares 27 (12,855) (12,049) (12,855) (12,049)
Cash flow hedge reserve 2,152 146 71
Currency translation reserve (1,325) (835)
Securities clearing fund reserve 30 25,000 25,000
Derivatives clearing fund reserve 31 34,021 34,021
Share-based payment reserve 17,430 19,695 17,430 19,695
Retained profits 359,631 310,625 243,475 83,073
Proposed dividends 28 139,082 171,225 139,082 171,225
Total equity 989,581 976,396 813,577 690,583
Statements of Changes in Equity Annual Report 2016 95

Statements of

Performance Overview
Changes in Equity
For the financial year ended 30 June 2016

The Group

Group Overview
Cash Securities Derivatives Share-
flow Currency clearing clearing based
Share Treasury hedge translation fund fund payment Retained Proposed
Note capital shares reserve* reserve* reserve* reserve* reserve* profits dividends Total
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
2016
Balance at 1 July 2015 428,568 (12,049) 146 (835) 25,000 34,021 19,695 310,625 171,225 976,396
Dividends paid
Financial year 2015
Final dividend (171,225) (171,225)
Financial year 2015
Under provision of final
dividend (232) (232)

Value Creation & Sustainability


Financial year 2016
Interim dividends 28 (160,697) (160,697)
Proposed dividend
Financial year 2016
Final dividend 28 (139,082) 139,082
Employee share plan Value of
employee services 5 7,903 7,903
Vesting of shares under share-
based remuneration plans 27(a) (2,123) 12,291 (10,168)
Purchase of treasury shares 27(a) - (12,637) (12,637)
Tax effect on treasury shares ** 27(a) - (460) (460)
(2,123) (806) (2,265) (300,011) (32,143) (337,348)

Governance
Total comprehensive income for
the financial year 2,006 (490) 349,017 350,533

Balance at 30 June 2016 426,445 (12,855) 2,152 (1,325) 25,000 34,021 17,430 359,631 139,082 989,581

These reserves are not available for distribution as dividends to the equity holders of the Company.
*

The tax effect relates to the deferred tax benefit/(liability) on the difference between consideration paid for treasury shares and variable share-based
**

payment expense.

Financials
Others
96 Singapore Exchange

Statements of
Changes in Equity (continued)
For the financial year ended 30 June 2016

The Group (continued)


Cash Securities Derivatives Share-
flow Currency clearing clearing based
Share Treasury hedge translation fund fund payment Retained Proposed
Note capital shares reserve* reserve* reserve* reserve* reserve* profits dividends Total
$000 $000 $000 $000 $000 $000 $000 $000 $000 $000
2015
Balance at 1 July 2014 428,332 (13,865) 391 (1,045) 25,000 34,021 16,116 261,943 171,184 922,077
Dividends paid
Financial year 2014
Final dividend (171,184) (171,184)
Financial year 2014
Under provision of
final dividend (178) (178)
Financial year 2015
Interim dividends 28 (128,527) (128,527)
Proposed dividend
Financial year 2015
Final dividend 28 (171,225) 171,225
Employee share plan Value of
employee services 5 13,792 13,792
Vesting of shares under share-
based remuneration plans 27(a) 236 9,977 (10,213)
Purchase of treasury shares 27(a) (8,025) (8,025)
Tax effect on treasury shares ** 27(a) (136) (136)
236 1,816 3,579 (299,930) 41 (294,258)

Total comprehensive income for


the financial year (245) 210 348,612 348,577

Balance at 30 June 2015 428,568 (12,049) 146 (835) 25,000 34,021 19,695 310,625 171,225 976,396

These reserves are not available for distribution as dividends to the equity holders of the Company.
*

The tax effect relates to the deferred tax benefit/(liability) on the difference between consideration paid for treasury shares and variable share-based
**

payment expense.
Statements of Changes in Equity Annual Report 2016 97

Statements of

Performance Overview
Changes in Equity (continued)
For the financial year ended 30 June 2016

The Company

Group Overview
Cash Share-
flow based
Share Treasury hedge payment Retained Proposed
Note capital shares reserve * reserve * profits dividends Total
$000 $000 $000 $000 $000 $000 $000
2016
Balance at 1 July 2015 428,568 (12,049) 71 19,695 83,073 171,225 690,583

Dividends paid
Financial year 2015 Final dividend (171,225) (171,225)
Financial year 2015 Under provision

Value Creation & Sustainability


of final dividend (232) (232)
Financial year 2016 Interim dividends 28 (160,697) (160,697)
Proposed dividend
Financial year 2016 Final dividend 28 (139,082) 139,082
Employee share plan Value of
employee services 5 7,903 7,903
Vesting of shares under share-based
remuneration plans 27(a) (2,123) 12,291 (10,168)
Purchase of treasury shares 27(a) (12,637) (12,637)
Tax effect on treasury shares ** 27(a) (460) (460)

Governance
(2,123) (806) (2,265) (300,011) (32,143) (337,348)
Total comprehensive income for
the financial year (71) 460,413 460,342

Balance at 30 June 2016 426,445 (12,855) 17,430 243,475 139,082 813,577

2015
Balance at 1 July 2014 428,332 (13,865) 16,116 124,233 171,184 726,000

Dividends paid
Financial year 2014 Final dividend (171,184) (171,184)
Financial year 2014 Under provision Financials
of final dividend (178) (178)
Financial year 2015 Interim dividends 28 (128,527) (128,527)
Proposed dividend
Financial year 2015 Final dividend 28 (171,225) 171,225
Employee share plan Value of
employee services 5 13,792 13,792
Vesting of shares under sharebased
remuneration plans 27(a) 236 9,977 (10,213)
Purchase of treasury shares 27(a) (8,025) (8,025)
Others

Tax effect on treasury shares ** 27(a) (136) (136)


236 1,816 3,579 (299,930) 41 (294,258)
Total comprehensive income for
the financial year 71 258,770 258,841

Balance at 30 June 2015 428,568 (12,049) 71 19,695 83,073 171,225 690,583

These reserves are not available for distribution as dividends to the equity holders of the Company.
*

The tax effect relates to the deferred tax benefit/(liability) on the difference between consideration paid for treasury shares and variable share-based
**

payment expense.
98 Singapore Exchange

Statement 0f
Cash Flows
For the financial year ended 30 June 2016

The Group
Note 2016 2015
$000 $000
Cash flows from operating activities
Profit before tax and share of results of associated company 414,849 409,646
Adjustments for:
- Depreciation and amortisation 9 59,855 57,273
- Variable share-based payment 5 7,903 13,792
- Impairment loss on available-for-sale financial asset 16 6,000
- Net write-off of property, plant and equipment and software 8 165
- Interest income 10 (9,445) (5,317)
- Dividend income from other investments 10 (1,327) (415)
- Net gain on disposal of property, plant and equipment and software 8 (43)
Operating cash flow before working capital change 477,957 474,979

Change in working capital


- Cash committed for National Electricity Market of Singapore (922) 3,245
- Trade and other receivables (275,586) 115,153
- Trade and other payables 293,586 (106,746)
- (Accrual)/reversal of property, plant and equipment and software (1,284) 6,073
Cash generated from operations 493,751 492,704

Income tax paid 25(c) (70,281) (63,656)


Net cash provided by operating activities 423,470 429,048

Cash flows from investing activities


Purchases of property, plant and equipment and software (73,847) (82,431)
Dividend received from other investments 1,327 415
Dividend received from associated company 672
Interest received 8,651 5,190
Acquisition of a subsidiary, net of cash acquired 21(b) (18,550)
Net cash used in investing activities (63,197) (95,376)

Cash flows from financing activities


Dividends paid (332,154) (299,889)
Purchase of treasury shares 27 (12,637) (8,025)
Net cash used in financing activities (344,791) (307,914)

Net increase in cash and cash equivalents 15,482 25,758


Cash and cash equivalents at beginning of financial year 12 632,601 606,843
Increase in cash committed for Singapore Exchange Derivatives Clearing Limited Clearing Fund 31 (50,000)
Cash and cash equivalents at end of financial year 12 598,083 632,601
Notes to the Financial Statements Annual Report 2016 99

Notes to the

Performance Overview
Financial Statements
For the financial year ended 30 June 2016

These notes form an integral part of and should be read in (b) Group accounting

Group Overview
conjunction with the accompanying financial statements.
(1) Subsidiaries
(i) Consolidation
1. General
Subsidiaries are entities over which the Group has
control. The Group controls an entity when it is
The Company is incorporated and domiciled in
exposed to, or has rights to, variable returns from
Singapore. On 23 November 2000, the Company was
its involvement with the entity and has the ability
admitted to the Official List of Singapore Exchange
to affect those returns through its power over the
Securities Trading Limited (SGX-ST). The address of
entity. Subsidiaries are consolidated from the date
the registered office is:
when control is transferred to the Group and cease to
be consolidated on the date when that control ceases.

Value Creation & Sustainability


2 Shenton Way
#02-02 SGX Centre 1
In preparing the consolidated financial statements,
Singapore 068804
intercompany transactions, balances and
unrealised gains and losses on transactions
The principal activities of the Group are to operate the
between group companies are eliminated.
only integrated securities exchange and derivatives
Unrealised losses are considered an impairment
exchange in Singapore and related clearing houses.
indicator of the asset transferred. Where
necessary, adjustments are made to the financial
The principal activities of the Company are those of
statements of subsidiaries to ensure consistency of
investment holding, treasury management, provision
accounting policies with those of the Group.
of management and administrative services to related

Governance
corporations, provision of contract processing and
Non-controlling interest is that part of the net
technology connectivity services. The principal activities
results of operations and of net assets of a
of the subsidiaries are set out in Note 22 to the financial
subsidiary attributable to interests which are not
statements. There has been no significant change in the
owned directly or indirectly by the equity holders
principal activities of the Company and its subsidiaries
of the Company. They are shown separately in the
during the financial year.
consolidated statement of comprehensive income,
statement of changes in equity and statement of
financial position. Total comprehensive income is
2. Significant accounting policies
attributed to the non-controlling interest based on
their respective interests in a subsidiary, even if
(a) Basis of preparation
this results in the non-controlling interests having a
These financial statements have been prepared deficit balance. Financials
in accordance with Singapore Financial Reporting
Standards (FRS) under the historical cost convention Please refer to Note 2(p) for the Companys
except as disclosed in the accounting policies accounting policy on investments in subsidiaries.
below. The preparation of financial statements in
conformity with FRS requires the use of estimates (ii) Acquisitions
and assumptions, based on managements best
The acquisition method of accounting is used to
knowledge, that affect the reported amounts of assets
account for business combinations by the Group.
and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
The consideration transferred for the acquisition
reported amounts of revenues and expenses during the
Others

of a subsidiary or business comprises the fair value


financial year.
of the assets transferred, the liabilities incurred
and the equity interests issued by the Group. The
There are no new or amended FRS and interpretations
consideration transferred also includes the fair
to FRS that are mandatory for application for the
value of any contingent consideration arrangement
financial year ended 30 June 2016.
and the fair value of any pre-existing equity
interest in the subsidiary.
100 Singapore Exchange

2. Significant accounting policies (continued) cost of acquisition of the associated company or


joint venture over the Groups share of fair value
(b) Group accounting (continued) of the identifiable net assets of the associated
company and is included in the carrying amount of
(1) Subsidiaries (continued)
the investments.
(ii) Acquisitions (continued)
(ii) Equity method of accounting
Acquisition-related costs are expensed as incurred.
In applying the equity method of accounting,
Identifiable assets acquired and liabilities and the Groups share of its associated companies
contingent liabilities assumed in a business post-acquisition profits or losses are recognised
combination are, with limited exceptions, measured in profit or loss and its share of post-acquisition
initially at their fair values at the acquisition date. other comprehensive income is recognised in other
comprehensive income. These post-acquisition
On an acquisition-by-acquisition basis, the movements and distribution received from
Group recognises any non-controlling interest associated companies are adjusted against the
in the acquiree at the date of acquisition either carrying amount of the investments. When the
at fair value or at the non-controlling interests Groups share of losses in an associated company
proportionate share of the acquirees net equals or exceeds its interest in the associated
identifiable assets. company, the Group does not recognise further
losses, unless it has obligations or has made
The excess of the consideration transferred, the payments on behalf of the associated company.
amount of any non-controlling interest in the
acquiree and the acquisition-date fair value of any Unrealised gains on transactions between
previous equity interest in the acquiree over the the Group and its associated companies are
fair value of the net identifiable assets acquired is eliminated to the extent of the Groups interest
recorded as goodwill. in the associated companies. Unrealised losses
are also eliminated unless the transactions
Please refer to Note 2(o) for the accounting policy provide evidence of an impairment of the assets
on goodwill. transferred. Where necessary, adjustments are
made to bring the accounting policies in line with
(iii) Disposals those of the Group.
When a change in the Groups ownership interest
(iii) Disposals
in a subsidiary results in a loss of control over the
subsidiary, the assets and liabilities of the subsidiary
including any goodwill are derecognised. Amounts Investments in associated companies are
previously recognised in other comprehensive derecognised when the Group loses significant
income in respect of that entity are also reclassified influence or joint control. Any retained interest
to profit or loss or transferred directly to retained in the entity is remeasured at its fair value. The
profits if required by a specific FRS. difference between the carrying amount of the
retained interest at the date when significant
Any retained interest in the entity is remeasured influence is lost and its fair value and any proceeds
at fair value. The difference between the carrying on partial disposal, is recognised in profit or loss.
amount of the retained interest at the date when
control is lost and its fair value is recognised in Please refer to Note 2(p) for the Companys
profit or loss. accounting policy on investments in
associated companies.
(2) Associated companies
(c) Currency translation
Associated companies are entities over which the Group
has significant influence, but not control, generally (1) Functional and presentation currency
accompanied by a shareholding giving rise to voting
Items included in the financial statements of each
rights of 20% and above but not exceeding 50%.
entity in the Group are measured using the currency
of the primary economic environment in which the
Investments in associated companies are accounted for
entity operates (functional currency). The financial
in the consolidated financial statements using the equity
statements are presented in Singapore Dollars (SGD),
method of accounting less impairment losses, if any.
which is the functional currency of the Company.
(i) Acquisitions
(2) Transactions and balances
Investments in associated companies are initially
Foreign currency transactions are translated into
recognised at cost. The cost of an acquisition is
the functional currency using the exchange rates at
measured at the fair value of the assets given,
the dates of transactions. Foreign exchange gains
equity instruments issued or liabilities incurred
and losses resulting from the settlement of such
or assumed at the date of exchange, plus costs
transactions are recognised in profit or loss.
directly attributable to the acquisition. Goodwill on
associated companies represents the excess of the
Notes to the Financial Statements Annual Report 2016 101

Foreign currency monetary assets and liabilities are been enacted or substantially enacted by the balance

Performance Overview
translated into the functional currency at the rates sheet date.
of exchange at the balance sheet date. Currency
translation differences are recognised in profit or loss. Deferred income tax is provided in full, using the
liability method, on temporary differences arising
Non-monetary items measured at fair values in foreign between the tax bases of assets and liabilities and their
currencies are translated using the exchange rates at carrying amounts in the financial statements.
the date when the fair values are determined.
Deferred income tax assets and liabilities are
The results and financial position of foreign operations measured at:
and associates that have a functional currency different
from the presentation currency are translated into the (i) the tax rates that are expected to apply when the

Group Overview
presentation currency as follows: related deferred income tax asset is realised or the
deferred income tax liability is settled, based on
(i) Assets and liabilities are translated at the closing tax rates and tax laws that have been enacted or
exchange rates at the reporting date; substantially enacted by the balance sheet date; and

(ii) Revenue and expenses are translated at average (ii) the tax consequence that would follow from the
exchange rates; and manner in which the Group expects, at the balance
sheet date, to recover or settle the carrying
(iii) All resulting currency translation differences are amounts of its assets and liabilities.
recognised in other comprehensive income and
accumulated in the currency translation reserve. Deferred tax assets are recognised to the extent that it

Value Creation & Sustainability


These currency translation differences are is probable that future taxable profit will be available
reclassified to profit or loss on disposal or partial against which the temporary differences can be utilised.
disposal of the foreign operations and associates
that give rise to such reserve. Deferred tax assets and liabilities are offset when there
is a legally enforceable right to set off current
(d) Revenue recognition tax assets against current tax liabilities and when
the deferred income taxes relate to the same
Revenue comprises the fair value of the consideration
tax jurisdiction.
received or receivable. Revenue is presented net of
goods and services tax and after eliminating revenue
(f) Leases
within the Group.
Operating lease payments are recognised in profit or

Governance
The Group recognises revenue when the amount of loss on a straight-line basis over the lease period.
revenue and related cost can be reliably measured
and it is probable that the collectability of the related When an operating lease is terminated before the
receivables is reasonably assured. The recognition expiry of the lease period, any payment required to be
criteria below must be met before revenue is made to the lessor by way of penalty is recognised as
recognised: an expense in the financial year in which the lease
is terminated.
(i) securities clearing revenue, equity and
commodities revenue, net of rebates, on a due date (g) Government grants
basis;
Grants from the government are recognised as a

Financials
receivable at their fair value when there is reasonable
(ii) listing revenue, collateral management, licence,
assurance that the grant will be received and the
membership revenue, connectivity revenue and
Group will comply with all the attached conditions.
rental income on a time proportion basis;
Government grants relating to expenses are offset
against the related expenses. Government grants
(iii) access revenue, market data revenue, post trade
relating to assets are deducted against the carrying
services revenue, corporate actions and other
amount of the assets.
revenue, management fees, when the services are
rendered;
(h) Employee benefits
(iv) interest income, on a time proportion basis using Employee benefits are recognised as employee
the effective interest method; and compensation expense when they are due, unless they
Others

can be capitalised as an asset.


(v) dividend income, when the right to receive
payment is established. (1) Defined contribution plans
The Group makes legally required contributions to
(e) Income taxes
the Central Provident Fund (Fund). The Groups
Current income tax liabilities (and assets) for current obligation, in regard to the defined contribution plan,
and prior periods are recognised at the amounts is limited to the amount it contributes to the Fund.
expected to be paid to (or recovered from) the tax The Groups contributions are recognised as employee
authorities, using the tax rates and tax laws that have compensation expense when they are due.
102 Singapore Exchange

2. Significant accounting policies (continued) amortised cost had no impairment been recognised in
prior periods.
(h) Employee benefits (continued)
(k) Available-for-sale financial assets
(2) Employee leave entitlement
Available-for-sale financial assets are initially
Employee entitlements to annual leave are recognised recognised at fair value plus transaction costs and are
when they accrue to employees. A provision is made subsequently carried at fair value. Purchase and sales
for the estimated liability for annual leave as a result of available-for-sale financial assets are recognised on
of services rendered by employees up to the balance trade date, on which the Group commits to purchase
sheet date. or sell the asset. Investments are derecognised when
the rights to receive cash flows from the available-
(3) Share-based compensation for-sale financial assets have expired or all risks and
rewards of ownership have been transferred. Changes
The fair value of employee services received in
in fair values of available-for-sale equity securities
exchange for equity-settled share-based remuneration
are recognised in the fair value reserve, together with
plans granted to employees is recognised as share-
the related currency translation differences. The fair
based payment to employees in profit or loss with a
value of available-for-sale financial assets not traded
corresponding increase in the share-based payment
in an active market are determined by using valuation
reserve over the vesting period. The amount is
techniques, such as discounted cash flow analysis.
determined by reference to the fair value of the shares
on grant date and the expected number of shares to be
Dividends on available-for-sale financial assets are
vested on vesting date.
recognised in profit or loss when the right to receive
payment is established.
At the end of each financial reporting period, the
Company revises its estimates of the expected number
When available-for-sale financial assets are sold,
of shares that the participants are expected to receive.
the difference between the carrying amount and the
Any changes to the expected number of shares to be
sales proceeds is recognised in the profit or loss. The
vested will entail a corresponding adjustment to the
accumulated fair value adjustments recognised in the
share-based payment to employees and share-based
fair value reserve within equity are reclassified to
payment reserve.
profit or loss.
Upon vesting of a share-based compensation plan, the
The Group assesses at each balance sheet date whether
portion of share-based payment previously recognised
there is objective evidence that the available-for-sale
in the share-based payment reserve is reversed against
financial assets are impaired. A significant or prolonged
treasury shares. Differences between share-based
decline in the fair value of the available-for-sale financial
payment and cost of treasury shares are taken to the
asset below its cost is considered an indicator that the
share capital of the Company.
available-for-sale financial asset is impaired. When there
is objective evidence that an available-for-sale financial
(i) Cash and cash equivalents
asset is impaired, the cumulative loss that has been
Cash and cash equivalents include cash on hand recognised directly in the fair value reserve is removed
and deposits with banks which are subject to an from the fair value reserve within equity and recognised
insignificant risk of change in value. in profit or loss. The cumulative loss is measured as the
difference between the acquisition cost and the current
(j) Trade and other receivables fair value, less any impairment loss on that available-for-
sale financial asset previously recognised in profit or loss.
Trade and other receivables are recognised on the
Impairment losses previously recognised in profit or loss
date they are originated and initially at fair value
on available-for-sale financial assets are not reversed
and subsequently measured at amortised cost using
through profit or loss.
the effective interest method, less an allowance for
impairment. An allowance for impairment of trade
and other receivables is recognised when there is (l) Property, plant and equipment
objective evidence that the Group will not be able to
(1) Property, plant and equipment
collect amounts due according to the original terms
of the receivables. The amount of the allowance is Property, plant and equipment are initially recognised at
the difference between the assets carrying amount cost and subsequently stated at cost less accumulated
and the present value of estimated future cash flows, depreciation and accumulated impairment losses.
discounted at the original effective interest rate and is
recognised in profit or loss. (2) Components of costs
The cost of property, plant and equipment includes
The allowance for impairment loss is reduced through
expenditure that is directly attributable to the
profit or loss in a subsequent period when the amount
acquisition and bringing the asset to the condition
of impairment loss decreases and the related decrease
necessary for it to be capable of operating in the
can be objectively measured. The carrying amount of
manner intended by management. Cost also includes
the asset previously impaired is increased to the extent
any fair value gains or losses on qualifying cash flow
that the new carrying amount does not exceed the
hedges of property, plant and equipment that are
Notes to the Financial Statements Annual Report 2016 103

transferred from the hedging reserve. Dismantlement, specifications, and which can be reliably measured, are

Performance Overview
removal or restoration costs are included as part of the recognised as a capital improvement and added to the
cost of property, plant and equipment if the obligation original cost of the software.
for dismantlement, removal or restoration is required
to be incurred for the purpose of acquiring and using Computer software costs and acquired computer
the asset. software licences are stated at cost less accumulated
amortisation and accumulated impairment losses.
(3) Depreciation of property, plant and equipment These costs are amortised using the straight-line
method over their estimated useful lives, a period not
No depreciation is provided on work-in-progress.
exceeding 7 years. Where an indication of impairment
exists, the carrying amount is assessed and written
Depreciation is calculated on a straight-line basis to
down immediately to its recoverable amount.
allocate the cost of property, plant and equipment over

Group Overview
their expected useful lives as follows:
The period and method of amortisation of the software
are reviewed at least at each financial year end. The
Useful lives effects of any revision of the amortisation period or
Leasehold improvements 1 to 7 years or lease term, method are included in profit or loss for the period in
whichever is shorter which the changes arise.
Furniture, fittings and 3 to 10 years
office equipment (n) Intangible asset
Computer hardware 1 to 7 years
Motor vehicles 5 years Intangible asset comprises the right to operate the
Singapore electricity spot market that is initially
Fully depreciated assets still in use are retained in the recognised at cost and is subsequently carried at

Value Creation & Sustainability


financial statements. cost less accumulated amortisation and accumulated
impairment losses. These costs are amortised to profit
The residual values and useful lives of property, or loss using the straight-line method over the estimated
plant and equipment are reviewed, and adjusted as useful life of 30 years of the underlying asset.
appropriate, at each financial year end. The effects of
any revision are recognised in profit or loss when the The period and method of amortisation of intangible
changes arise. asset are reviewed at least at each period end. The
effects of any revision of the amortisation period or
(4) Subsequent expenditure method are included in profit or loss for the period in
which the changes arise.
Subsequent expenditure relating to property, plant

Governance
and equipment that has already been recognised is (o) Goodwill on acquisitions
added to the carrying amount of the asset only when it
is probable that future economic benefits, in excess of Goodwill on acquisitions of subsidiaries on or
the originally assessed standard of performance of the after 1 January 2010 represents the excess of the
existing asset, will flow to the Group and the cost can consideration transferred, the amount of any non-
be reliably measured. All other repair and maintenance controlling interest in the acquiree and the acquisition-
expenses are recognised in profit or loss when incurred. date fair value of any previously-held equity interest in
the acquiree over the fair value of the net identifiable
(5) Disposal assets acquired.

On disposal or retirement of a property, plant and Goodwill on acquisition of subsidiaries and associated
equipment, the difference between the net disposal
Financials
companies prior to 1 January 2010 represents the
proceeds and its carrying amount is recognised in profit excess of the cost of an acquisition over the fair value
or loss. of the Groups share of the identifiable net assets
acquired.
(m) Software
Costs recognised are directly associated with Goodwill on subsidiaries is recognised separately in the
identifiable software controlled by the Group that statement of financial position and carried at cost less
generate economic benefits exceeding costs beyond accumulated impairment losses.
one year. Cost also includes any fair value gains or
losses on qualifying cash flow hedges of computer Goodwill on associated companies is included in the
software that are transferred from the hedging reserve. carrying amount of the investments.
Others

Costs associated with maintaining computer software


are expensed off when incurred.

Acquired computer software licences are capitalised


on the basis of the cost incurred to acquire and other
directly attributable costs of preparing the software for
its intended use. Direct expenditures, including employee
costs, which enhance or extend the performance of
computer software programmes beyond their original
104 Singapore Exchange

2. Significant accounting policies (continued) The recoverable amount is determined on an individual


asset basis unless the asset does not generate cash
(p) Investments in subsidiaries and associated companies flows that are largely independent of those from other
assets. If this is the case, the recoverable amount is
Investments in subsidiaries and associated companies
determined for the CGU to which the asset belongs.
are stated at cost less accumulated impairment losses
in the statement of financial position of the Company.
An impairment loss for an asset other than goodwill is
Where an indication of impairment exists, the carrying
reversed if, and only if, there has been a change in the
amount of the investment is assessed and written
estimates used to determine the assets recoverable
down to its recoverable amount. Impairment losses
amount since the last impairment loss was recognised.
are recognised in the profit or loss in the year in which
The carrying amount of this asset is increased to
it is determined.
its revised recoverable amount, provided that this
amount does not exceed the carrying amount that
On disposal of an investment, the difference between
would have been determined (net of any accumulated
the net proceeds and its carrying amount is recognised
amortisation or depreciation) had no impairment loss
in profit or loss.
been recognised for the asset in prior years. A reversal
of impairment loss for an asset other than goodwill is
(q) Impairment of non-financial assets
recognised in profit or loss.
(1) Goodwill
(r) Trade and other payables
Goodwill recognised separately as an intangible asset is
tested for impairment annually and whenever there is Trade and other payables represent liabilities for goods
indication that the goodwill may be impaired. Goodwill and services provided to the Group prior to the end of
included in the carrying amount of an investment financial year which are unpaid. They are classified as
in associated company or joint venture is tested for current liabilities, if payment is due within one year
impairment as part of the investment, rather than or less. Otherwise, they are presented as non-current
separately. liabilities.

For the purpose of impairment testing of goodwill, Trade and other payables are initially measured at fair
goodwill is allocated to each of the Groups cash- value, and subsequently measured at amortised cost,
generating-units (CGU) expected to benefit from using the effective interest method.
synergies arising from the business combination. A
CGU is the smallest identifiable group of assets that (s) Offsetting financial instruments
generate cash inflows that are largely independent of
Financial assets and liabilities are offset and the net
the cash inflows from other assets or group of assets.
amount reported in the balance sheet when there is
An impairment loss is recognised when the carrying
a legally enforceable right to offset and there is an
amount of a CGU, including the goodwill, exceeds the
intention to settle on a net basis or realise the asset and
recoverable amount of the CGU. Recoverable amount
settle the liability simultaneously.
of a CGU is the higher of the CGUs fair value less cost
to sell and value-in-use.
(t) Provisions
The total impairment loss of a CGU is allocated first to Provisions are recognised when the Group has a legal
reduce the carrying amount of goodwill allocated to the or constructive obligation as a result of past events, it is
CGU and then to the other assets of the CGU pro-rata probable that an outflow of resources will be required
on the basis of the carrying amount of each asset in to settle the obligation, and a reliable estimate of the
the CGU. amount of the obligation can be made. Changes in the
estimated amount are recognised in profit or loss when
An impairment loss on goodwill is recognised as an the changes arise.
expense and is not reversed in a subsequent period.
(u) Derivative financial instruments and hedging activities
(2) Property, plant and equipment A derivative financial instrument is initially recognised
Software at its fair value on the date the contract is entered
Intangible assets into and is subsequently carried at its fair value.
Investments in subsidiaries and associated companies The method of recognising the resulting gain or loss
depends on whether the derivative is designated as a
Property, plant and equipment, software, intangible
hedging instrument, and if so, the nature of the item
assets and investments in subsidiaries and associated
being hedged.
companies are reviewed for impairment whenever
there is any objective evidence or indication that the
The Group documents at the inception of the
carrying amount may not be fully recoverable. An
transaction the relationship between the hedging
impairment loss is recognised for the amount by which
instruments and hedged items, as well as its risk
the assets carrying amount exceeds its recoverable
management objective and strategies for undertaking
amount, which is the higher of an assets net selling
various hedge transactions. The Group also documents
value and its value in use. The impairment loss is
its assessment, both at hedge inception and on an
recognised in profit or loss.
ongoing basis, on whether the derivatives designated
Notes to the Financial Statements Annual Report 2016 105

as hedging instruments are highly effective in offsetting Final dividends are transferred from retained profits to

Performance Overview
changes in fair value or cash flows of the hedged items. a proposed dividend reserve when they are proposed
by the directors. The amount will be transferred from
Derivatives that are designated as hedging instrument the proposed dividend reserve to dividend payable
are designated by the Group as cash flow hedge. Fair when the dividends are approved by the shareholders.
value changes on derivatives that are not designated or
do not qualify for hedge accounting are recognised in (x) Segment reporting
profit or loss when the changes arise.
Operating segments are reported in a manner consistent
with the internal reporting provided to the executive
Currency forwards cash flow hedge
committee who are responsible for allocating resources
The Group has entered into currency forwards that and assessing performance of the operating segments.
qualify as cash flow hedges against highly probable

Group Overview
forecasted transactions in foreign currencies. The 3. Critical accounting estimates and judgments
fair value changes on the effective portion of the
currency forwards designated as cash flow hedges are Estimates and judgments are regularly evaluated based
recognised in the hedging reserve and transferred to on historical experience, current circumstances and
either the cost of a hedged non-monetary asset upon expectations of future events. The following provides
acquisition or profit or loss when the hedged forecast a description of the areas involving a higher degree of
transactions are recognised. judgment or complexity, or areas where assumptions
and estimates are significant to the financial
The fair value of currency forward contracts purchased statements:
or sold is based on the quoted bid price or offer price
respectively at the balance sheet date. The notional (a) Available-for-sale financial asset

Value Creation & Sustainability


principal amounts of the currency forward contracts
The available-for-sale financial asset held by the Group
are recorded as off-balance sheet items.
and the Company is an unlisted equity security that
is not traded in an active market. The valuation of the
The fair value changes on the ineffective portion of
available-for-sale financial asset is determined using
currency forwards are recognised immediately in
discounted cash flow model and managements best
profit or loss. When a forecasted transaction is no
estimate of expected future cash flows, long term
longer expected to occur, the gains and losses that
growth rate and discount rate (Note 2(k) and Note 16).
were previously recognised in the hedging reserve are
transferred to profit or loss immediately.
(b) Intangible asset
(v) Share capital and treasury shares Intangible asset is valued on acquisition using

Governance
appropriate methodology and amortised over the
Ordinary shares are classified as equity.
estimated useful life. The valuation and useful life
are based on managements best estimates of future
When any entity within the Group purchases the
performance and periods over which value from the
Companys ordinary shares (treasury shares), the
intangible asset will be realised (Note 2(n) and Note
consideration paid, including any directly attributable
19). Management reassess the estimated useful life at
incremental costs, net of income taxes, is deducted
each period end, taking into account the period over
from equity attributable to the Companys equity
which the intangible asset is expected to generate
holders and presented as treasury shares within
future economic benefit. Intangible asset is tested for
equity, until they are cancelled, sold or reissued.
impairment in accordance with Note 2(q)(2).

Financials
When treasury shares are cancelled, the cost of the
(c) Goodwill
treasury shares is deducted against the share capital
account, if the shares are purchased out of capital of Goodwill is tested for impairment in accordance with
the Company, or against the retained profits of the Note 2(q)(1). The recoverable amount of goodwill is
Company, if the shares are purchased out of profits of based on value-in-use calculation using discounted
the Company. cash flow model and managements best estimate of
expected future cash flows, long term growth rate and
When treasury shares are subsequently sold or discount rate (Note 20).
reissued pursuant to the share-based remuneration
plan, the cost of the treasury shares is reversed from
the treasury share account and the realised gain or
Others

loss on sale or reissue, net of any directly attributable


incremental transaction costs and related income tax, is
taken to the share capital account of the Company.

(w) Dividends
Interim dividends are deducted from retained
profits during the financial year in which they are
declared payable.
106 Singapore Exchange

4. Operating revenue

Operating revenue comprised the following:

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Equities and Fixed Income

Issuer Services
Listing 46,668 51,570
Corporate actions and other 35,882 36,011
82,550 87,581
Securities Trading and Clearing (previously
known as Securities)
Securities clearing 158,547 163,540
Access 37,589 37,675
Collateral management, membership and other 8,871 8,101
205,007 209,316
Post Trade Services (previously known as
Depository services)
Securities settlement 93,803 81,267
Contract processing 15,943 15,991 11,465 11,084
Depository management 8,460 7,397
118,206 104,655 11,465 11,084

405,763 401,552 11,465 11,084


Derivatives
Equity and Commodities 241,421 224,228
Collateral management, licence, membership and other 83,883 71,563
325,304 295,791

Market Data and Connectivity


Market data 38,371 36,600 374 410
Connectivity 48,671 44,574 16,592 14,024
87,042 81,174 16,966 14,434

5. Staff

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000

Salaries 102,299 85,747 73,218 61,979


Employers contribution to Central Provident
Fund on salaries 7,445 6,346 5,008 4,380
109,744 92,093 78,226 66,359

Variable bonus 39,408 41,770 28,405 32,613


Employers contribution to Central Provident
Fund on variable bonus 2,207 2,298 1,432 1,589
41,615 44,068 29,837 34,202
Variable share-based payment 7,903 13,792 7,903 13,792
159,262 149,953 115,966 114,353

The remuneration of key management under the employment of the Group and the Company are included in staff costs.
Refer to Note 38 on key managements remuneration.
Notes to the Financial Statements Annual Report 2016 107

6. Technology

Performance Overview
The Group The Company
2016 2015 2016 2015
$000 $000 $000 $000
System maintenance and rental 71,782 62,100 39,759 33,575
Depreciation and amortisation 51,869 50,593 18,080 17,835
Communication charges 4,195 3,218 3,397 2,782
127,846 115,911 61,236 54,192

7. Premises

Group Overview
The Group The Company
2016 2015 2016 2015
$000 $000 $000 $000
Rental and maintenance of premises 17,765 16,791 13,109 12,341
Depreciation of furniture and fittings and
leasehold improvements 6,969 5,851 6,871 5,754
24,734 22,642 19,980 18,095

8. Other operating expenses

Value Creation & Sustainability


The Group The Company
2016 2015 2016 2015
$000 $000 $000 $000
Marketing 8,188 8,355 2,128 2,900
Travelling 2,950 3,063 1,895 2,005
Allowance/(reversal) for impairment of
trade receivables (net) 486 529 (2) (11)
Net write-off of property, plant and equipment 165 54
Net gain on disposal of property, plant and
equipment and software (43)
Directors fee 2,203 2,108 1,983 1,976

Governance
Regulatory fee 4,159 3,524 400 425
Services from price vendors 3,274 2,649 1,044 1,123
Credit facilities fees 842 856 455 443
Amortisation of intangible asset 906 678
Miscellaneous 4,835 6,263 6,689 5,758
27,965 28,025 14,646 14,619

9. Operating profit

The Group The Company

Financials
2016 2015 2016 2015
$000 $000 $000 $000
Operating profit is arrived after:

Charging:
Audit services by auditor of the Company 692 628 243 241
Other services by auditor of the Company 331 59 233 35
Rental of Technology equipment - operating lease 1,898 2,914 1,226 1,355
Rental of premises - operating lease 22,368 20,755 15,820 15,599
Provision for unutilised leave 587 1,165 500 1,012
Depreciation and amortisation 59,855 57,273 25,062 23,740
Others

And crediting:
Grants from government schemes and agencies 76 119 76 119
Collateral management revenue on collateral balances held
in trust (net) 49,266 39,923
108 Singapore Exchange

10. Other gains - net

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Other revenue including interest income:
Interest income from fixed deposits and
current account with banks 9,445 5,317 4,624 2,435
Dividend income 1,327 415 1,999 415
Others 778 358 1,134 219
11,550 6,090 7,757 3,069
Net foreign exchange gain/(loss) 159 1,721 242 (124)
Impairment loss on available- for-sale financial
asset (Note 16) (6,000) (6,000)
5,709 7,811 1,999 2,945

11. Earnings per share



The Group
2016 2015
$000 $000
Net profit attributable to the equity holders of the Company 349,017 348,612

Weighted average number of ordinary shares in issue for basic earnings per share (000) 1,070,925 1,070,745
Adjustments for:
Shares granted under SGX performance share plans and deferred long-term incentives
schemes (000) 2,873 3,465
Weighted average number of ordinary shares for diluted earnings per share (000) 1,073,798 1,074,210

Earnings per share (in cents per share)


Basic 32.6 32.6
Diluted 32.5 32.5

Basic earnings per share is calculated by dividing the net profit attributable to the equity holders of the Company by the
weighted average number of ordinary shares in issue during the year.

For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares in issue is
adjusted for the effects of all dilutive potential ordinary shares. Shares granted under the SGX performance share plans
and the deferred long-term incentives schemes have potential dilutive effect on ordinary shares. The adjustment made
represents the number of shares expected to vest under the SGX performance share plans and the defered long-term
incentives schemes.
Notes to the Financial Statements Annual Report 2016 109

12. Cash and cash equivalents

Performance Overview
The Group The Company
2016 2015 2016 2015
$000 $000 $000 $000
Cash at bank and on hand 66,078 43,531 4,525 10,207
Fixed deposits with banks 800,228 806,371 436,200 426,230
866,306 849,902 440,725 436,437

For the purpose of presenting the statement of cash flows, the cash and cash equivalents comprise the following:

The Group

Group Overview
2016 2015
$000 $000
Cash and cash equivalents per statement of cash flows 598,083 632,601
Add: Cash committed for
Singapore Exchange Derivatives Clearing Limited (SGX-DC) Clearing Fund (Note 31) 200,021 150,021
Securities Clearing Fund (Note 30) 60,000 60,000
National Electricity Market of Singapore (NEMS) (Note 14) 8,202 7,280
Cash and cash equivalents (as above) 866,306 849,902

The Security Clearing Fund contributed by The Central Depository (Pte) Limited ("CDP") is presented as part of cash and

Value Creation & Sustainability


cash equivalents as it relates to deposits placed with banks. Accordingly, the comparative figure has been reclassified to
conform with the current years presentation.

13. Trade and other receivables

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Trade receivables (net) (Note (a)) 904,533 622,911 5,260 4,431
Other receivables (Note (b)) 25,448 30,597 11,327 10,565
929,981 653,508 16,587 14,996

Governance
(a) Trade receivables comprise:
Receivables from clearing members and settlement banks
Daily settlement of accounts for due contracts and rights 762,878 416,330
Receivables under NEMS (Note 14) 81,702 134,122
Other trade receivables 61,621 74,113 5,261 4,436
906,201 624,565 5,261 4,436
Less: Allowance for impairment of trade receivables (Note 39) (1,668) (1,654) (1) (5)
904,533 622,911 5,260 4,431

The receivables from clearing members and settlement banks represent the net settlement obligations to CDP.
The corresponding net settlement obligations from CDP to the clearing members and settlement banks are disclosed Financials
in Note 24(a).

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
(b) Other receivables comprise:
Prepayments 15,729 16,397 8,753 9,302
Interest receivable 7,702 12,784 1,585 977
Deposits 706 976 302 249
Others

Staff advances 16 30 4 6
Others (non-trade) 1,295 410 683 31
25,448 30,597 11,327 10,565
110 Singapore Exchange

14. Cash, receivables and payables under NEMS

The Energy Market Company Pte Ltd (EMC) has cash, receivables and payables in respect of sale of electricity to market
participants and purchase of electricity and ancillary services from market participants in the NEMS as follows:

The Group
2016 2015
$000 $000

Cash committed for NEMS (Note 12) 8,202 7,280


Receivables under NEMS (Note 13(a)) 81,702 134,122
Total settlement cash and receivables 89,904 141,402

Payables under NEMS (Note 24(a)) 89,904 141,402


Total settlement payables 89,904 141,402

(a) Cash committed for NEMS


The cash represents EMCs commitment to NEMS for the operation of the NEMS. The manners in which the cash can be
used are defined by the Singapore Electricity Market Rules (Market Rules) issued by the Energy Market Authority of
Singapore. The committed cash is not available to EMC for its operations.

(b) Adjustments to balances arising from post-transaction changes in metering data or dispute over final
settlement statements

EMC acts as an administrator in the NEMS. In the NEMS, the Market Support Services Licensee (MSSL) is responsible for
the provision and accuracy of the metering data, which is used in calculation of settlements.

Under the Market Rules, transactions must be settled based on final settlement invoices. Subsequent to the final
settlement date and up to 253 trading days from the trading day, EMC may, however be advised by the MSSL on the
changes to the metering data and the quantities of electricity traded.

In addition, the market participants may dispute over final settlement statements. These will result in adjustments to
the settlement amounts due to/from the market participants. Any adjustments to be made after the issue of the final
settlement invoices shall be included in the preliminary settlement statement issued immediately following the resolution
of disputes.
Notes to the Financial Statements Annual Report 2016 111

15. Derivative financial instruments

Performance Overview
The table below sets out the notional principal amounts of the outstanding currency forward contracts of the Group and
their corresponding fair values at the balance sheet date:

Group Company
Fair value Fair value
Contract Contract
notional notional
amount Asset Liability amount Asset Liability
$000 $000 $000 $000 $000 $000
2016

Group Overview
Cash-flow hedges
Currency forwards 82,830 2,665 (66)
2,665 (66)

2015
Cash-flow hedges
Currency forwards 44,031 311 (84) 1,614 86
311 (84) 86

As at 30 June 2016, the settlement dates on currency forward contracts range between 1 month and 9 months (2015: 1

Value Creation & Sustainability


month and 9 months).

Currency forwards designated as cash flow hedges are entered to hedge highly probable forecast transactions
denominated in United States Dollar (USD), Japanese Yen (JPY) and Euro (EUR). The currency contracts have
maturity dates that coincide within the expected occurrence of these transactions. Gains and losses recognised in the
cash flow hedge reserve prior to the occurrence of these transactions are reclassified to profit or loss in the month
during which the hedged forecast transaction affects the profit or loss. Gains and losses of currency forwards used to
hedge highly probable forecast foreign currency purchases of property, plant and equipment and software transactions
are included in the cost of the assets and recognised in the profit or loss over their estimated useful lives as part of
depreciation expenses.

Governance
16. Available-for-sale financial asset

The Group and


The Company
2016 2015
$000 $000
Unlisted equity security - BSE Limited (BSE)
Balance at beginning of financial year 50,956 50,956
Impairment losses (Note 10) (6,000)
Balance at end of financial year 44,956 50,956

The fair value of the unlisted equity security was determined using the discounted cash flow model. Key inputs of the Financials
computation are as follows:

Key Inputs Basis


Free cash flows Managements estimates of growth of Indian Historical trend of Indian equity market,
equity market and BSEs projected past performance of BSE and future economic
financial performance growth of India

Long term growth rate 6.5% (2015: 7.5%) Long term growth rate of the Indian economy

Discount rate 13.5% (2015: 13.5%) Cost of capital to operate an exchange in India
Others

During the financial year, the Group and the Company recognised an impairment loss of $6,000,000 (2015: Nil) against
the unlisted equity security. The impairment arose mainly due to a decline in the fair value of the equity security and
depreciation of the Indian Rupee (INR) against the SGD.

The estimated fair value is sensitive to any change in key inputs to the valuation model such as future cash flows, long
term growth rate and discount rate. A sensitivity analysis of the key inputs has been included in Note 39.
112 Singapore Exchange

17. Property, plant and equipment

Furniture,
fittings
Leasehold and office Computer Motor Work-in-
improvements equipment hardware vehicles progress(a) Total
$000 $000 $000 $000 $000 $000
The Group
2016
Cost
At 1 July 2015 33,719 6,717 55,071 750 8,221 104,478
Reclassification 1,222 29 5,370 (6,621)
Additions 433 601 2,390 15,388 18,812
Disposals (1,867) (259) (6,142) (403) (8,671)
At 30 June 2016 33,507 7,088 56,689 750 16,585 114,619

Accumulated depreciation
At 1 July 2015 6,721 1,176 34,773 639 43,309
Depreciation charge(b) 5,959 1,257 10,138 111 17,465
Disposals (1,790) (256) (6,139) (8,185)
At 30 June 2016 10,890 2,177 38,772 750 52,589

Net book value


At 30 June 2016 22,617 4,911 17,917 16,585 62,030

2015
Cost
At 1 July 2014 22,614 5,426 45,522 750 16,194 90,506
Acquisition of subsidiary (Note 21) 108 10 3,716 3,834
Reclassification 10,097 958 4,664 (15,719)
Additions 900 329 2,401 7,746 11,376
Disposals (6) (1,232) (1,238)
At 30 June 2015 33,719 6,717 55,071 750 8,221 104,478

Accumulated depreciation
At 1 July 2014 1,677 99 26,754 488 29,018
Depreciation charge(b) 5,044 1,083 9,251 151 15,529
Disposals (6) (1,232) (1,238)
At 30 June 2015 6,721 1,176 34,773 639 43,309

Net book value


At 30 June 2015 26,998 5,541 20,298 111 8,221 61,169
Notes to the Financial Statements Annual Report 2016 113

Furniture,

Performance Overview
fittings
Leasehold and office Computer Motor Work-in-
improvements equipment hardware vehicles progress(a) Total
$000 $000 $000 $000 $000 $000
The Company
2016
Cost
At 1 July 2015 33,489 6,630 39,914 750 3,797 84,580
Reclassification 971 1,970 (2,941)
Additions 345 535 1,594 6,823 9,297
Disposals (92) (27) (28) (54) (201)

Group Overview
At 30 June 2016 34,713 7,138 43,450 750 7,625 93,676

Accumulated depreciation
At 1 July 2015 6,645 1,157 23,744 639 32,185
Depreciation charge(b) 5,900 1,218 7,644 111 14,873
Disposals (92) (27) (28) (147)
At 30 June 2016 12,453 2,348 31,360 750 46,911

Net book value


At 30 June 2016 22,260 4,790 12,090 7,625 46,765

Value Creation & Sustainability


2015
Cost
At 1 July 2014 22,610 5,342 34,974 750 14,949 78,625
Reclassification 10,007 958 4,035 (15,000)
Additions 872 330 1,674 3,848 6,724
Disposals (769) (769)
At 30 June 2015 33,489 6,630 39,914 750 3,797 84,580

Accumulated depreciation

Governance
At 1 July 2014 1,673 99 16,845 488 19,105
Depreciation charge(b) 4,972 1,058 7,668 151 13,849
Disposals (769) (769)
At 30 June 2015 6,645 1,157 23,744 639 32,185

Net book value


At 30 June 2015 26,844 5,473 16,170 111 3,797 52,395


(a)
Work-in-progress comprises mainly systems infrastructure under development and leasehold improvements
under construction.

Financials
(b)
Depreciation of leasehold improvements in SGXs data centres amounting to $247,000 (2015: $276,000) is classified as
depreciation and amortisation expense under Technology cost for both Group and Company. Others
114 Singapore Exchange

18. Software

Work-in-
Software progress Total
$000 $000 $000
The Group
2016
Cost
At 1 July 2015 273,097 67,577 340,674
Reclassification 40,029 (40,029)
Additions 15,963 40,356 56,319
Write-off (20,441) (110) (20,551)
At 30 June 2016 308,648 67,794 376,442

Accumulated amortisation
At 1 July 2015 200,697 200,697
Amortisation charge 41,484 41,484
Write-off (20,441) (20,441)
At 30 June 2016 221,740 221,740

Net book value


At 30 June 2016 86,908 67,794 154,702

2015
Cost
At 1 July 2014 247,699 23,957 271,656
Acquisition of subsidiary (Note 21) 3,724 743 4,467
Reclassification 14,019 (14,019)
Additions 8,086 56,896 64,982
Write-off (431) (431)
At 30 June 2015 273,097 67,577 340,674

Accumulated amortisation
At 1 July 2014 160,062 160,062
Amortisation charge 41,066 41,066
Write-off (431) (431)
At 30 June 2015 200,697 200,697

Net book value


At 30 June 2015 72,400 67,577 139,977
Notes to the Financial Statements Annual Report 2016 115

Work-in-

Performance Overview
Software progress Total
$000 $000 $000
The Company
2016
Cost
At 1 July 2015 65,278 1,797 67,075
Reclassification 755 (755)
Additions 2,101 10,402 12,503
Write-off (2,965) (2,965)
At 30 June 2016 65,169 11,444 76,613

Group Overview
Accumulated amortisation
At 1 July 2015 37,340 37,340
Amortisation charge 10,189 10,189
Write-off (2,965) (2,965)
At 30 June 2016 44,564 44,564

Net book value


At 30 June 2016 20,605 11,444 32,049

2015

Value Creation & Sustainability


Cost
At 1 July 2014 55,053 7,547 62,600
Reclassification 5,984 (5,984)
Additions 4,339 234 4,573
Write-off (98) (98)
At 30 June 2015 65,278 1,797 67,075

Accumulated amortisation
At 1 July 2014 27,547 27,547
Amortisation charge 9,891 9,891

Governance
Write-off (98) (98)
At 30 June 2015 37,340 37,340

Net book value


At 30 June 2015 27,938 1,797 29,735

19. Intangible asset

The Group
2016 2015
$000 $000
Cost Financials
Beginning of financial year 27,140
Addition (Note 21(c)) 27,140
Balance at end of financial year 27,140 27,140

Accumulated amortisation
Beginning of financial year 678
Amortisation charge (Note 8) 906 678
Balance at end of financial year 1,584 678
Others

Net book value 25,556 26,462

The intangible asset is the right to operate the Singapore electricity spot market arising from the acquisition of
EMC (Note 21).

No impairment loss has been recognised as there is no objective evidence or indication that the carrying amount may not
be fully recoverable as at 30 June 2016 (2015: Nil).
116 Singapore Exchange

20. Goodwill

The carrying amount of goodwill is as follows:

The Group
2016 2015
$000 $000
Beginning of financial year 9,614
Acquisition of subsidiary (Note 21(c)) 9,614
Balance at end of financial year 9,614 9,614

The goodwill relates to the acquisition of EMC, a subsidiary operating the Singapore electricity spot market.

The recoverable amount of the goodwill was determined based on value-in-use calculation using the discounted cash
flow model. Key inputs of the computation are as follows:

Key Inputs Basis


Free cash flows Managements forecasts of earnings and capital Past performance, expectations of electricity demand
expenditure over a ten-year period growth in Singapore and market developments

Long term growth rate 2% - 3% (2015: 3%) Long term electricity demand growth rate and long
term growth rate of the Singapore economy

Discount rate 9.5% (2015: 9.5%) Cost of capital to operate the Singapore electricity
spot market

Based on the value-in-use calculations, there is no impairment on goodwill (FY2015: Nil). While the estimated recoverable
amount of the goodwill is sensitive to any change in key inputs to the value-in-use calculations, the change in the
estimated recoverable amount from any reasonably possible change on the key input does not materially cause the
recoverable amount to be lower than its carrying amount.

21. Business combinations

In financial year 2013, the Group acquired 49% in EMC for $19,989,000 and had accounted for EMC as an associated
company. On 1 October 2014, the Group acquired the remaining 51% equity interest in EMC for a consideration of
$23,000,000. Consequently, EMC became a wholly owned subsidiary.

The principal activity of EMC is to operate the Singapore Electricity Spot Market. This acquisition strengthens the Groups
ability to further develop energy related products.
Notes to the Financial Statements Annual Report 2016 117

Details of the consideration paid, the assets acquired and liabilities assumed, and the effects on the cash flows of the

Performance Overview
Group, at the acquisition date, are as follows:

$000
(a) Purchase consideration
Cash paid 23,000
Fair value of previously-held equity interest * 19,957
Consideration transferred for the business 42,957

*
The Group has recognised the previously-held equity interest at its fair value of $19,957,000. The gain or loss as a result of
re-measuring to fair value the previously-held equity interest is nil.

Group Overview
(b) Effect on cash flows of the Group
Cash paid (as above) 23,000
Less: Cash and cash equivalents in subsidiary acquired (4,450)
Cash outflow on acquisition 18,550

(c) Identifiable assets acquired and liabilities assumed


Cash and cash equivalents 4,450
Cash committed for NEMS 10,525

Value Creation & Sustainability


Trade and other receivables 194,402
Prepayments 2,020
Property, plant and equipment 3,834
Software 4,467
Intangible asset 27,140
Total assets 246,838

Trade and other payables 207,351


Taxation 133
Deferred tax liabilities 6,011
Total liabilities 213,495

Governance
Total identifiable net assets 33,343
Add: Goodwill 9,614
Consideration transferred for the business 42,957

(d) Acquisition-related costs


Acquisition-related costs of $60,000 are included in Professional fees in the statement of comprehensive income
and in operating cash flows in the statement of cash flows of financial year 2015.

(e) Acquired receivables


The fair value and gross contractual amount of trade and other receivables is $194,402,000. Financials

(f) Goodwill
The goodwill of $9,614,000 is attributable to the synergies expected to arise from the acquisition.

(g) Revenue and profit contribution


In the financial year 2015, the acquired business contributed operating revenue of $17,980,000 and net profit after
tax of $2,496,000 to the Group from the period from 1 October 2014 to 30 June 2015. Had EMC been consolidated
from 1 July 2014, consolidated operating revenue and consolidated net profit after tax for the year ended 30 June
Others

2015 would have been $785,157,000 and $348,770,000 respectively.


118 Singapore Exchange

22. Investments in subsidiaries

The Company
2016 2015
$000 $000
Equity investments at cost
Balance at beginning of financial year 494,001 493,501
Incorporation of subsidiary 500
Capital injection into subsidiaries 79,500
573,501 494,001

Long-term receivables
Amount due from subsidiary 40,989 40,989
Balance at end of financial year 614,490 534,990

The carrying value of the amount due from subsidiary approximates its fair value. The amount due from subsidiary is
interest-free and has no fixed terms of repayment.
Notes to the Financial Statements Annual Report 2016 119

Details of the subsidiaries are as follows:

Performance Overview
Equity held by
The Company Subsidiaries
Country of
business and 2016 2015 2016 2015
Name of subsidiary Note Principal activities incorporation % % % %
Singapore Exchange Securities (a) Operating a Singapore 100 100
Trading Limited securities exchange
Singapore Exchange Derivatives (a) Operating a Singapore 100 100
Trading Limited derivatives exchange

Group Overview
The Central Depository (a) Providing clearing, Singapore 100 100
(Pte) Limited counterparty guarantee,
depository and related
services for securities
transactions
Singapore Exchange Derivatives (a) Providing clearing, Singapore 100 100
Clearing Limited counterparty guarantee
and related services for
derivatives transactions
SGX Bond Trading Pte. Ltd. (a) Providing bond Singapore 100 100
trading services

Value Creation & Sustainability


Singapore Exchange IT Solutions (a) Providing computer Singapore 100 100
Pte Limited services and software
maintenance
Asian Gateway Investments (a) Investment holding Singapore 100 100
Pte Ltd
Singapore Commodity (a) Dormant Singapore 100 100
Exchange Limited
SGX International Pte. Ltd. (a) Dormant Singapore 100 100

Governance
Securities Clearing and Computer (a) Dormant Singapore 100 100
Services (Pte) Limited
Asian Gateway Investments (China) (a) Investment holding Singapore 100 100
Pte. Ltd.
Energy Market Company (a) Operating an Singapore 100 100
Pte Ltd electricity market
Asia Converge Pte Ltd (a) Dormant Singapore 100 100
Asiaclear Pte Ltd (a) Dormant Singapore 100 100
CDP Nominees Pte Ltd (a) Dormant Singapore 100 100
Globalclear Pte Ltd (a) Dormant Singapore 100 100 Financials

Joint Asian Derivatives Pte. Ltd. (a) Dormant Singapore 100 100
SGX America Limited (b) Dormant United States 100 100
of America
Shanghai Yaxu Consultancy Company (c) Providing consultancy Peoples Republic
Limited services of China 100 100
(a)
Audited by PricewaterhouseCoopers LLP, Singapore.
(b)
Not required to be audited in the United States of America.
Others

(c)
Audited by PricewaterhouseCoopers Zhong Tian LLP, Peoples Republic of China.
120 Singapore Exchange

23. Investment in associated company

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000

Investment in associated company 9,387 9,426 4,389 4,389

Details of the associated company held by the Group are as follows:

Equity holding
Country of
business and 2016 2015
Name of company Principal activity incorporation % %
Philippines Dealing System
Holdings Corp. (a) Investment holding Philippines 20 20
(a)
Audited by SyCip Gorres Velayo & Co, Philippines

There was no associated company that was individually material to the Group (2015: Nil).

The following table summarises, in aggregate, the Groups share of profit and other comprehensive income of the
associated company accounted for using the equity method:

The Group
2016 2015
$000 $000

Profit from continuing operations 1,112 1,903 (b)


Total comprehensive income 1,112 1,903
(b)
Includes $470,000 of the Groups share of profit from EMC for the period from 1 July 2014 to 30 September 2014. EMC had subsequently became
a wholly owned subsidiary of the Group following the Groups acquisition of the remaining 51% equity interest in EMC on 1 October 2014.

There are no contingent liabilities relating to the Groups interest in the associated company. (2015: Nil).
Notes to the Financial Statements Annual Report 2016 121

24. Trade and other payables

Performance Overview
The Group The Company
2016 2015 2016 2015
$000 $000 $000 $000
Current
Trade payables (Note (a)) 882,699 585,448 762 352
Other payables (Note (b)) 129,953 132,878 62,449 60,920
Amount due to subsidiaries (non-trade) (Note (c)) 307,681 357,843
1,012,652 718,326 370,892 419,115

Non-current

Group Overview
Trade and other payables:
Accrual for operating expenses 312 1,807

(a) Trade payables comprise:


Payables to clearing members and settlement banks
Daily settlement of accounts for due contracts
and rights 762,878 416,330
Payables under NEMS (Note 14) 89,904 141,402
Other trade payables 29,917 27,716 762 352
882,699 585,448 762 352

Value Creation & Sustainability


The payables to clearing members and settlement banks represent the net settlement obligations by CDP. The
corresponding net settlement obligations by clearing members and settlement banks to CDP are disclosed in Note 13(a).

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
(b) Other payables comprise:
Accrual for operating expenses 74,115 75,275 24,609 21,278
Accrual for bonus 44,349 45,450 32,467 34,367
Central Provident Fund payable 1,583 1,481 1,043 846

Governance
Advance receipts 3,860 4,569 231 231
Others (non-trade) 6,046 6,103 4,099 4,198
129,953 132,878 62,449 60,920

(c) The amounts due to subsidiaries are unsecured, non-interest bearing and repayable on demand.

Financials
Others
122 Singapore Exchange

25. Income taxes

(a) Income tax expense

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Tax expense attributable to profit is made up of:
current income tax 71,110 71,920 3,859 1,896
deferred income tax (1,797) (2,115) (2,204) 1,183
69,313 69,805 1,655 3,079
Over provision in prior financial years:
current income tax (2,369) (6,868) (800) (240)
66,944 62,937 855 2,839

(b) Tax reconciliation


The tax expense on profit differs from the amount that would arise using the Singapore rate of income tax due to
the following:

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Profit before tax and share of results of
associated company 414,849 409,646 461,268 261,609

Tax calculated at a tax rate of 17% (2015: 17%) 70,524 69,640 78,416 44,474
Tax effect of:
Singapore statutory income exemption (182) (162) (26) (26)
Income not subject to tax (283) (301) (76,840) (43,081)
Tax incentives and rebate (1,627) (1,546) (428) (428)
Expenses not deductible for tax purposes 422 1,826 338 2,061
Others 459 348 195 79
Over provision in prior financial years (2,369) (6,868) (800) (240)
66,944 62,937 855 2,839

(c) Movements in provision for tax

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Balance at beginning of financial year 76,802 75,273 2,714 1,143
Acquisition of subsidiary (Note 21(c)) 133
Income tax paid (70,281) (63,656) (599) (85)
Tax expense on profit for the financial year 71,110 71,920 3,859 1,896
Over provision in prior financial years (2,369) (6,868) (800) (240)
Balance at end of financial year 75,262 76,802 5,174 2,714
Notes to the Financial Statements Annual Report 2016 123

(d) Deferred income tax

Performance Overview
The following amounts, determined after appropriate offsetting, are shown in the statement of financial position:

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Deferred tax assets:
to be recovered within 12 months 4,636 1,570 1,772 1,570
to be recovered after 12 months 449 670 449 670
5,085 2,240 2,221 2,240
Effect of offsetting (5,085) (2,240) (2,221) (2,240)

Group Overview

Deferred tax liabilities:


to be settled within 12 months 8,910 8,374 3,045 2,819
to be settled after 12 months 14,011 12,630 3,104 5,108
22,921 21,004 6,149 7,927
Effect of offsetting (5,085) (2,240) (2,221) (2,240)
17,836 18,764 3,928 5,687

The movements in the deferred tax assets and liabilities during the financial year are as follows:

Value Creation & Sustainability


The Group deferred tax assets

Unutilised Accelerated Employee


tax losses tax depreciation share plan Total
2016 2015 2016 2015 2016 2015 2016 2015
$000 $000 $000 $000 $000 $000 $000 $000
Balance at beginning of financial year 2,240 2,462 2,240 2,462
Credited/(Charged) to profit or loss 696 2,168 441 (86) 3,305 (86)
Charged to equity (460) (136) (460) (136)
Balance at end of financial year 696 2,168 2,221 2,240 5,085 2,240

Governance
The Group deferred tax liabilities

Intangible asset
arising from
Cash flow Accelerated business
hedge reserve tax depreciation combination Total
2016 2015 2016 2015 2016 2015 2016 2015
$000 $000 $000 $000 $000 $000 $000 $000
Balance at beginning of financial year 30 80 16,476 17,164 4,498 21,004 17,244
Acquisition of subsidiary (Note 21(c)) 1,397 4,614 6,011
Charged/(credited) to profit or loss 1,662 (2,085) (154) (116) 1,508 (2,201)
Financials
Charged/(credited) to equity 409 (50) 409 (50)
Balance at end of financial year 439 30 18,138 16,476 4,344 4,498 22,921 21,004

The Company deferred tax assets

Employee share plan


2016 2015
$000 $000
Balance at beginning of financial year 2,240 2,462
Credited/(charged) to profit or loss 441 (86)
Charged to equity (460) (136)
Others

Balance at end of financial year 2,221 2,240


124 Singapore Exchange

25. Income taxes (continued)

(d) Deferred income tax (continued)


The Company deferred tax liabilities

Cash flow Accelerated


hedge reserve tax depreciation Total
2016 2015 2016 2015 2016 2015
$000 $000 $000 $000 $000 $000
Balance at beginning of financial year 15 7,912 6,815 7,927 6,815
(Credited)/charged to profit or loss (1,763) 1,097 (1,763) 1,097
(Credited)/charged to equity (15) 15 (15) 15
Balance at end of financial year 15 6,149 7,912 6,149 7,927

Deferred tax assets have not been recognised in respect of the following items:

The Group
2016 2015
$000 $000
Tax losses 22,705 23,572
Unutilised capital allowances 615 615

These items principally relate to four (2015: five) entities within the Group of which four (2015: four) entities are dormant.
Deferred tax assets have not been recognised in respect of these items as it is not probable that future taxable profits
will be available against which the Group can utilise the benefits. The tax losses and unutilised capital allowances are
subject to the relevant provisions of the Singapore Income Tax Act and confirmation by the tax authorities.

(e) Tax effects on other comprehensive income

The Group The Company


Before Tax benefit/ Net of Before Tax benefit/ Net of
tax (liability) tax tax (liability) tax
$000 $000 $000 $000 $000 $000
2016
Other comprehensive income

Net currency translation differences


of financial statements of subsidiary
and associated company (490) (490)
Fair value gains/ (losses) on cash flow hedges 2,415 (409) 2,006 (86) 15 (71)
1,925 (409) 1,516 (86) 15 (71)

2015
Other comprehensive income

Net currency translation differences


of financial statements of
associated company 210 210
Fair value gains/ (losses) on cash
flow hedges (295) 50 (245) 86 (15) 71
(85) 50 (35) 86 (15) 71
Notes to the Financial Statements Annual Report 2016 125

26. Provisions

Performance Overview
The Group The Company
2016 2015 2016 2015
$000 $000 $000 $000
Provision for SGX-MAS Market Development
Scheme (Note (a)) 1,802 1,802
Provision for unutilised leave (Note (b)) 4,972 4,385 3,695 3,195
Provision for dismantlement, removal or restoration of
property, plant and equipment (Note (c)) 3,001 3,246 2,982 2,977
9,775 9,433 6,677 6,172

Group Overview
(a) Provision for SGX-MAS Market Development Scheme
Provision for SGX-MAS Market Development Scheme is used to fund projects that raise awareness of the securities and
derivatives market among investors.

The provision recorded at the Group as at 30 June 2016 is $1,802,000 (2015: $1,802,000).

(b) Provision for unutilised leave


Provision for unutilised leave is the estimated liability for annual leave as a result of services rendered by employees up
to the balance sheet date.

Value Creation & Sustainability


Movements in this provision are as follows:

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Balance at beginning of financial year 4,385 2,909 3,195 2,183
Acquisition of subsidiary (Note 21) 311
Provision made during the financial year, net 587 1,165 500 1,012
Balance at end of financial year 4,972 4,385 3,695 3,195

(c) Provision for dismantlement, removal or restoration of property, plant and equipment

Governance
Provision for dismantlement, removal or restoration is the estimated cost of dismantlement, removal or restoration of
leased premises. The provision is expected to be utilised upon return of the leased premises.

Movements in this provision are as follows:

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Balance at beginning of financial year 3,246 3,435 2,977 3,435
Acquisition of subsidiary (Note 21) 269
Provision (utilised)/made during the financial year, net (245) (458) 5 (458) Financials
Balance at end of financial year 3,001 3,246 2,982 2,977
Others
126 Singapore Exchange

27. Share capital

(a) Share capital and treasury shares


The Group and The Company

Number of shares Amount


Issued Treasury Share Treasury
shares shares capital shares
000 000 $000 $000
2016
Balance at beginning of financial year 1,071,642 1,487 428,568 (12,049)
Purchase of treasury shares 1,746 (12,637)
Vesting of shares under share-based remuneration plans (1,449) (2,123) 12,291
Tax effect on treasury shares (460)
Balance at end of financial year 1,071,642 1,784 426,445 (12,855)

2015
Balance at beginning of financial year 1,071,642 1,742 428,332 (13,865)
Purchase of treasury shares 920 (8,025)
Vesting of shares under share-based remuneration plans (1,175) 236 9,977
Tax effect on treasury shares (136)
Balance at end of financial year 1,071,642 1,487 428,568 (12,049)

All issued ordinary shares are fully paid. There is no par value for these ordinary shares.

Fully paid ordinary shares carry one vote per share and carry a right to dividends as and when declared by the Company,
except for shares held as treasury shares.

The Company purchased 1,746,100 of its shares (2015: 920,000) in the open market during the financial year. The total
amount paid to purchase the shares was $12,637,000 (2015: $8,025,000). The Company holds the shares bought back as
treasury shares and plans to use these shares to fulfil its obligations under the Companys share-based remuneration plans.

(b) Performance share plans


(i) Outstanding performance shares
Details of performance shares awarded to participants at the balance sheet date are as follows:

The Group and The Company


FY2012 FY2013 FY2014 FY2015 FY2016
Number of shares grant * grant ** grant ** grants ** grant ** Total
2016
Balance at beginning of financial year 640,300 710,500 785,700 2,136,500
Granted 487,500 487,500
Vested (398,300) (398,300)
Lapsed (242,000) (63,700) (76,500) (31,500) (413,700)
Balance at end of financial year 646,800 709,200 456,000 1,812,000

2015
Balance at beginning of financial year 1,040,100 670,300 742,000 2,452,400
Granted 811,600 811,600
Vested (395,400) (395,400)
Lapsed (644,700) (30,000) (31,500) (25,900) (732,100)
Balance at end of financial year 640,300 710,500 785,700 2,136,500
*
The number of shares vested represents the level of achievement against the performance conditions.
**
Represents the number of shares required if participants are to be awarded at 100% of the grant. However, the shares to be awarded at the
vesting date may range from 0% to 150% of the grant, depending on the level of achievement against the performance conditions.

The terms of the performance share plans are set out in the Directors Statement under the caption SGX
Performance Share Plan.
Notes to the Financial Statements Annual Report 2016 127

(ii) Fair value of performance shares

Performance Overview
The fair value of the performance shares at grant date and the key assumptions of the fair value model for the grants
were as follows:

FY2016 FY2015 FY2014 FY2013 FY2012


grant grants grant grant grant
Date of grant 30.10.2015 15.08.2014 and 15.08.2013 15.08.2012 04.04.2012
30.06.2015

Vesting date 01.09.2019 01.09.2017 and 01.09.2016 01.09.2015 01.09.2014


01.09.2018

Group Overview
Number of performance 487,500 811,600 753,900 702,000 1,088,100
shares at grant date

Fair value per performance $6.30 $5.27 to $5.54 $5.77 $5.19 $5.27
share at grant date

Assumption under
Monte-Carlo Model

Expected volatility

Value Creation & Sustainability


Shares of Singapore 16.30% 14.44% to 19.81% 19.82% 27.36%
Exchange Limited 16.03%
FTSE Mondo Visione 11.77% to 21.14% 23.02% 28.29%
18.94%
Shares of selected peer exchanges 18.51% to
51.53%

Historical volatility period 36 months 36 months 36 months 36 months 36 months

Risk-free interest rate 1.42% 0.71% to 1.27% 0.34% 0.28% 0.37%


Date on which yield of 30.10.2015 15.08.2014 and 15.08.2013 15.08.2012 03.04.2012

Governance
Singapore government 30.06.2015
bond was based
Term (years) 3 3 3 3 3

Cost of funding
Risk-free interest rate 1.42% 0.71% to 1.27% 0.34% 0.28% 0.37%

Expected dividend yield based 4.11% 3.97% 4.85% 4.91% 3.73%


on managements forecast

Share price reference $7.38 $7.08 to $7.94 $7.58 $6.90 $6.63


Financials
Others
128 Singapore Exchange

27. Share capital (continued)

(c) Deferred long-term incentives scheme


(i) Outstanding deferred long-term incentives shares
Details of deferred long-term incentives shares awarded to recipients at the balance sheet date are as follows:

The Group and The Company


FY2012 FY2013 FY2014 FY2015 FY2016
Number of shares award award award awards award Total
2016
Balance at beginning of financial year 307,172 748,365 1,232,700 2,288,237
Awarded 956,200 956,200
Lapsed (12,968) (23,600) (34,000) (70,568)
Vested (307,172) (374,135) (369,430) (1,050,737)
Balance at end of financial year 361,262 839,670 922,200 2,123,132

2015
Balance at beginning of financial year 59,800 650,305 1,195,000 1,905,105
Awarded 1,283,800 1,283,800
Lapsed (800) (19,338) (50,469) (51,100) (121,707)
Vested (59,000) (323,795) (396,166) (778,961)
Balance at end of financial year 307,172 748,365 1,232,700 2,288,237

The terms of the deferred long-term incentives scheme are set out in the Directors Statement under the caption
SGX Deferred Long-Term Incentives Scheme.

(ii) Fair value of deferred long-term incentives shares


The fair value of deferred long-term incentives shares was estimated by the present value of the share price adjusted
for future expected dividends and funding cost. The fair value of shares at award date and the key assumptions of
the fair value model for the awards were as follows:

FY2016 Award
Date of award 17.08.2015

Vesting date 01.09.2016 01.09.2017 01.09.2018

Number of shares at award date 318,690 318,690 318,820

Fair value per deferred long-term incentives share at award date $7.72 $7.74 $7.69

Assumption used in fair value model

Risk-free interest rate 0.97% 1.17% 1.43%


Date on which yield of Singapore government bond was based 17.08.2015 17.08.2015 17.08.2015

Cost of funding
Risk-free interest rate 0.97% 1.17% 1.43%

Expected dividend yield based on managements forecast 3.91% 3.65% 4.36%

Share price reference $8.02 $8.02 $8.02


Notes to the Financial Statements Annual Report 2016 129

FY2015 Awards

Performance Overview
Date of award 15.08.2014 and 30.06.2015

Vesting date 01.09.2015 01.09.2016 01.09.2017 01.09.2018

Number of shares at award date 386,460 427,893 428,013 41,434

Fair value per deferred long-term


incentives share at award date $6.88 $6.82 to $7.48 $6.77 to $7.50 $7.45

Assumption used in fair value model

Group Overview
Risk-free interest rate 0.34% 0.47% to 0.86% 0.69% to 0.99% 1.28%
Date on which yield of Singapore 14.08.2014 and 14.08.2014 and
government bond was based 14.08.2014 29.06.2015 29.06.2015 29.06.2015

Cost of funding
Risk-free interest rate 0.34% 0.47% to 0.86% 0.69% to 0.99% 1.28%

Expected dividend yield based


on managements forecast 4.35% 3.91% 3.65% 4.36%

Value Creation & Sustainability


Share price reference $7.21 $7.21 to $7.83 $7.21 to $7.83 $7.83

FY2014 Award
Date of award 15.08.2013

Vesting date 01.09.2014 01.09.2015 01.09.2016

Number of shares at award date 407,797 407,797 407,906

Fair value per deferred long-term incentives share at award date $7.34 $7.34 $7.26

Governance
Assumption used in fair value model

Risk-free interest rate 0.22% 0.26% 0.33%


Date on which yield of Singapore government bond was based 14.08.2013 14.08.2013 14.08.2013

Cost of funding
Risk-free interest rate 0.22% 0.26% 0.33%

Expected dividend yield based on managements forecast 4.43% 4.49% 5.63%

Share price reference $7.61 $7.61 $7.61 Financials


Others
130 Singapore Exchange

27. Share capital (continued)

(c) Deferred long-term incentives scheme (continued)


(ii) Fair value of deferred long-term incentives shares (continued)

FY2013 Award
Date of award 15.08.2012

Vesting date 02.09.2013 01.09.2014 01.09.2015

Number of shares at award date 348,092 348,092 348,216

Fair value per deferred long-term incentives share at grant date $6.68 $6.65 $6.61

Assumption used in fair value model

Risk-free interest rate 0.22% 0.25% 0.28%


Date on which yield of Singapore government bond was based 14.08.2012 14.08.2012 14.08.2012

Cost of funding
Risk-free interest rate 0.22% 0.25% 0.28%

Expected dividend yield based on managements forecast 4.44% 4.90% 5.54%

Share price reference $6.96 $6.96 $6.96

FY2012 Award
Date of award 05.08.2011

Vesting date 01.11.2012 01.11.2013 01.11.2014

Number of shares at award date 77,900 73,550 73,550

Fair value per deferred long-term incentives share at award date $7.09 $7.06 $7.04

Assumption used in fair value model

Risk-free interest rate 0.18% 0.14% 0.33%


Date on which yield of Singapore government bond was based 04.08.2011 04.08.2011 04.08.2011

Cost of funding
Risk-free interest rate 0.18% 0.14% 0.33%

Expected dividend yield based on managements forecast 4.16% 4.54% 4.85%

Share price reference $7.33 $7.33 $7.33


Notes to the Financial Statements Annual Report 2016 131

28. Dividends

Performance Overview
The Group
and The Company
2016 2015
$000 $000
Interim tax exempt dividends of 15.0 cents per share (2015: 12.0 cents) 160,697 128,527
Proposed final tax exempt dividends of 13.0 cents per share (2015: 16.0 cents) 139,082 171,225
299,779 299,752

The directors have proposed a final tax exempt dividend for 2016 of 13.0 cents (2015: 16.0 cents) per share amounting to
a total of $139,082,000 (2015: $171,225,000). The proposed dividend has been transferred from retained profits to the

Group Overview
proposed dividends reserve.

29. Segment information

Management determines the operating segments based on the reports reviewed and used by the Executive Management
Committee for performance assessment and resources allocation.

The Group operates primarily in Singapore and is organised into four segments as follows:

(i) Equities and Fixed Income provision of issuer services, securities trading and clearing, post trade services,
membership and collateral management.

Value Creation & Sustainability


(ii) Derivatives provision of derivatives trading and clearing services, membership and collateral management.

(iii) Market Data and Connectivity provision of market data and connectivity services.

(iv) Corporate A non-operating segment comprising corporate activities which are not allocated to the three operating
segments described above.

Segment performance is evaluated based on operating profits of the segment. Management monitors the operating
results of the segments for the purpose of making decisions on performance assessment and resource allocation.

Governance
Financials
Others
132 Singapore Exchange

29. Segment information (continued)

Equities Market
and Fixed Data and
Income Derivatives Connectivity Corporate The Group
$000 $000 $000 $000 $000
2016
Operating Revenue 405,763 325,304 87,042 818,109
Operating profits 225,633 138,224 45,283 409,140
Other gains - net 5,709 5,709
Share of results of associated company 1,112 1,112
Tax (66,944) (66,944)
Net profit after tax 349,017

Segment Assets 911,405 235,164 37,979 920,936 2,105,484


Segment assets includes:
Investment in associated company 9,387 9,387
Additions to:
Property, plant and equipment
and software 23,269 46,574 5,288 75,131
Intangible asset
Goodwill
Segment Liabilities 842,465 163,675 9,988 99,775 1,115,903

Other Information
Depreciation and amortisation 32,124 21,864 5,867 59,855

2015
Operating Revenue 401,552 295,791 81,174 778,517
Operating profits 232,614 131,673 37,548 401,835
Other gains net 7,811 7,811
Share of results of associated company 1,903 1,903
Tax (62,937) (62,937)
Net profit after tax 348,612

Segment Assets 584,948 263,288 42,719 910,657 1,801,612


Segment assets includes:
Investment in associated company 9,426 9,426
Additions to:
Property, plant and equipment
and software 35,607 31,733 9,018 76,358
Intangible asset 27,140 27,140
Goodwill 9,614 9,614
Segment Liabilities 497,641 215,145 10,692 101,738 825,216

Other Information
Depreciation and amortisation 27,198 25,123 4,952 57,273
Notes to the Financial Statements Annual Report 2016 133

30. Securities Clearing Fund

Performance Overview
The Securities Clearing Fund was established under the clearing rules of the securities clearing subsidiary, The Central
Depository (Pte) Limited (CDP). The clearing fund is to provide resources to enable CDP to discharge its obligations and
the liabilities of defaulting clearing members arising from transactions in approved securities and futures.

The Securities Clearing Fund uses a scalable structure to better align members contributions to their clearing risk
exposure with CDP. Contributions by clearing members will vary with the value of securities and futures traded.

The Securities Clearing Fund comprised contributions from both CDP and its clearing members as follows:

(a) Contribution by CDP

Group Overview
The Group
2016 2015
$000 $000
Cash at bank - contributed by CDP 60,000 60,000

Cash contributions by CDP are denominated in SGD and placed in interest bearing accounts with two banks (2015: 2
banks). The initial $25,000,000 contribution by CDP into the Securities Clearing Fund is recorded in the securities clearing
fund reserve.

(b) Contribution by Clearing Members

Value Creation & Sustainability


The cash contributions from CDP clearing members are not recorded in the consolidated statement of financial position
of the Group as these contributions are held in trust by the Group.

The Group
2016 2015
$000 $000
Contributions by CDP clearing members
cash at bank, held in trust 45,328 44,680

The Securities Clearing Fund is a trust asset held subject to the trust purposes set out in CDP Clearing Rule 7.1.2.

Governance
Payments out of the Securities Clearing Fund shall be made in the following order:

(1) Contributions by defaulting clearing members;

(2) Contributions by CDP of an amount not less than 15% of the Securities Clearing Fund size or $30,000,000, whichever
is higher;

(3) Collateralised contributions by all other non-defaulting clearing members on a pro-rata basis in the proportion of
each clearing members required Collateralised Contribution to the total required Collateralised Contributions of all
other non-defaulting clearing members at the time of default;
Financials
(4) Contingent contributions by all other non-defaulting clearing members on a pro-rata basis in the proportion of each
clearing members required Contingent Contributions to the total required Contingent Contributions of all other non-
defaulting clearing members;

(5) Insurance (if any); and

(6) Any other contributions (The last layer of the Securities Clearing Fund contributed by CDP amounted to $30,000,000
(2015: $30,000,000)).
Others
134 Singapore Exchange

31. Singapore Exchange Derivatives Clearing Limited (SGX-DC) Clearing Fund

The SGX-DC Clearing Fund structure specifies the apportionment and sequence of use of resources in the event of single
and multiple defaults.

The Group has committed cash amounting to $200,021,000 (2015: $150,021,000) (Note 12) to support the SGX-DC
Clearing Fund. The SGX-DC Clearing Fund is made up of the following:

2016 2015
$000 $000
SGX-DC share capital 152,000 102,000
Derivatives clearing fund reserve (Note a) 34,021 34,021
Other SGX-DCs contributions 14,000 14,000
200,021 150,021

Except for the $200,021,000 (2015: $150,021,000) mentioned above, other resources available for the SGX-DC Clearing
Fund are not included in the consolidated statement of financial position of the Group. These are third party obligations
towards the SGX-DC Clearing Fund and where they are held by SGX-DC, these resources are held in trust (Note 32(b)(iii)).

(a) Derivatives clearing fund reserve


Upon the dissolution of the SGX-DT Compensation Fund on 24 November 2007, the cash proceeds of $34,021,000
were set aside as the Groups derivatives clearing fund reserve to support the SGX-DC Clearing Fund. This reserve is not
available for distribution as dividend.

(b) Utilisation of SGX-DC Clearing Fund


The SGX-DC clearing rules enable resources to be mobilised should any derivatives clearing member be unable to meet its
obligations. Under the SGX-DC Clearing Fund structure, the resources available would be utilised in the following priority:

(1) the defaulting derivatives clearing members collateral deposited with or provided to SGX-DC;

(2) SGX-DCs contributions of an amount equivalent to 15% of its Clearing Fund size;

(3) security deposits of non-defaulting derivatives clearing members participating in the same Contract Class as the
defaulted derivatives clearing member;

(4) further assessments on non-defaulting derivatives clearing members participating in the same Contract Class as the
defaulted derivatives clearing member;

(5) SGX-DCs contributions of an amount equivalent to 10% of its Clearing Fund size;

(6) security deposits of other non-defaulting derivatives clearing members not participating in the same Contract Class
as the defaulted derivatives clearing member;

(7) further assessments on other non-defaulting derivatives clearing members not participating in the same Contract
Class as the defaulted derivatives clearing member; and

(8) any other contributions to the SGX-DC Clearing Fund.

The rules of SGX-DC provide for SGX-DC to continually draw down resources in the above sequence in the event of
multiple defaults occurring within a period of 90 days. Upon utilisation of the SGX-DC Clearing Fund, SGX-DC will be
obliged to contribute at least 25% of the SGX-DC Clearing Fund size in relation to paragraph 31(b)(2) and 31(b)(5) above.

32. Security, margin and other deposits

The Group, in its normal course of business, through subsidiaries operating as clearing houses, holds assets in trust or
contingent assets such as irrevocable letters of credit, government securities or on-demand guarantees. None of these
assets or contingent assets, together with the corresponding liabilities, are included in the consolidated statement of
financial position of the Group.

(a) The Central Depository (Pte) Limited (CDP)


(i) Margin and other deposits
As the clearing house for securities and marginable futures contracts traded on Singapore Exchange Securities
Trading Limited (SGX-ST), CDP becomes the novated counterparty for these instruments.
Notes to the Financial Statements Annual Report 2016 135

Performance Overview
The rules of CDP require its clearing members to provide collateral in the form acceptable to CDP as margin deposits
to guarantee the performance of the obligations associated with marginable futures contracts and securities traded
on SGX-ST. The total collateral required by CDP at 30 June 2016 were approximately $106,930,000
(2015: $35,566,000).

In addition, the CDP Clearing Rules provides that CDP may request its clearing members to place additional collateral
with CDP in respect of its securities clearing activities from time to time.

Forms of collateral acceptable by CDP as margins include cash, government securities, selected common stocks and
other instruments as approved by CDP from time to time.

Group Overview
As at 30 June 2016, clearing members had lodged the following collateral with CDP:

2016 2015
$000 $000
Margin deposits
Cash 157,393 120,535

Other collateral
Irrevocable letters of credit 20,000 20,000

All cash deposits in the financial year are placed in interest-bearing accounts with banks. Interest earned on the cash

Value Creation & Sustainability


deposits is credited to the securities clearing members, with a portion retained by CDP.

(b) Singapore Exchange Derivatives Clearing Limited (SGX-DC)


(i) Margin deposits
As the clearing house for futures and options traded on Singapore Exchange Derivatives Trading Limited (SGX-DT),
Over-The-Counter (OTC) commodities contracts and Over-The-Counter Financial (OTCF) derivatives contracts,
SGX-DC becomes the novated counterparty for these derivative instruments.

The rules of SGX-DC require its derivatives clearing members to provide collateral in the form acceptable to SGX-DC
as margin deposits to guarantee the performance of the obligations associated with derivative instruments positions.

Governance
The total margins required by SGX-DC at 30 June 2016 were approximately $7,616,398,000 (2015: $6,489,597,000).

As at 30 June 2016, clearing members had lodged the following collateral with SGX-DC:

2016 2015
$000 $000
Margin deposits
Cash 8,784,395 7,288,661
Quoted government securities, at fair value 1,124,613 1,034,307

All cash deposits are placed in interest-bearing accounts with banks. Interest earned on the cash deposits is credited Financials
to the derivatives clearing members, with a portion retained by SGX-DC.

(ii) Performance deposits and deposits received for contract value


For commodities contracts which are physically-settled, the rules of SGX-DC and its contract specifications require
its clearing members to provide collateral in the form acceptable to SGX-DC as performance deposits to secure the
performance of a delivery contract. In its capacity as escrow agent to the physical delivery of the contract, SGX-DC
also collects the contract value of the commodities to be delivered through the exchange.

As at 30 June 2016, the following were lodged with SGX-DC for performance deposits purposes:
Others

2016 2015
$000 $000
Performance deposits and deposits received for contract value
Cash 538
136 Singapore Exchange

32. Security, margin and other deposits (continued)

(b) Singapore Exchange Derivatives Clearing Limited (SGX-DC) (continued)


(iii) Security and other deposits
The rules of SGX-DC require its clearing members to deposit security for their derivatives clearing obligations
to SGX-DC:

(i) Clearing Members who clear exchange-traded derivatives and OTC commodities contracts are required to post the
higher of $1,000,000 or up to 4.5% (currently 3.3%) of the daily average of risk margin during the preceding three-
month period, in cash, government securities or any forms of collateral acceptable to SGX-DC;

(ii) Clearing Members who clear OTCF derivatives contracts are required to post the higher of US$5,000,000 or 6.0% of
the daily average of risk margin during the preceding three-month period, in cash or government securities or any
forms of collateral acceptable to SGX-DC;

(iii) Clearing Members who clear exchange-traded derivatives, OTC commodities contracts and OTCF derivatives
contracts will be required to post the aggregate of (1) and (2).

As at 30 June 2016, the following security and other deposits were lodged with SGX-DC for clearing fund purpose:

2016 2015
$000 $000
Security and other deposits
Cash 543,785 461,729
Quoted government securities, at fair value 6,453 6,448

(iv) Collateral for Mutual Offset Settlement Agreement


As at 30 June 2016, irrevocable letters of credit amounting to approximately $1,026,001,000 (2015: $618,654,000)
were lodged by The Chicago Mercantile Exchange with SGX-DC. This is to fulfill collateral requirements under the
Mutual Offset Settlement Agreement.

33. Financial requirements

(a) CDP
The rules of CDP impose financial requirements on its clearing members. As at 30 June 2016, clearing members had
lodged the following collateral with CDP to support their financial requirements:

2016 2015
$000 $000
Cash 10,000 10,000

None of these assets or contingent assets nor the corresponding liabilities are included in the consolidated statement of
financial position of the Group.

(b) SGX-DC
The rules of SGX-DC impose financial requirements on its clearing members. As at 30 June 2016, clearing members had
lodged the following collateral with SGX-DC to support their financial requirements:

2016 2015
$000 $000
Cash 510,835 581,659

None of these assets or contingent assets nor the corresponding liabilities are included in the consolidated statement of
financial position of the Group.
Notes to the Financial Statements Annual Report 2016 137

34. Collaterals for Securities Borrowing and Lending

Performance Overview
CDP operates a Securities Borrowing and Lending (SBL) programme for its Depositors and Depository Agents. SBL
involves a temporary transfer of securities from a lender to a borrower, via CDP, for a fee. The SBL programme requires
the borrowers of securities to provide collateral in the form of cash and/or certain designated securities.

As at 30 June 2016, borrowers had lodged the following collateral with CDP for SBL purpose:

2016 2015
$000 $000
Cash 24,747 20,797
Securities, at fair value 19,022 18,790

Group Overview
None of these assets or contingent assets nor the corresponding liabilities are included in the statement of financial
position of the Group.

35. Securities and Derivatives Fidelity Funds

The Fidelity Funds are administered by Singapore Exchange Securities Trading Limited (SGX-ST) and Singapore
Exchange Derivatives Trading Limited (SGX-DT), as required by Section 176 of the Securities and Futures Act. The assets
of the Funds are kept separate from all other assets, and are held in trust for the purposes set out in the Securities and
Futures Act. The balances of the Fidelity Funds are as follows:

Value Creation & Sustainability


2016 2015
$000 $000
Securities Exchange Fidelity Fund 35,705 35,325
Derivatives Exchange Fidelity Fund 24,269 24,011
59,974 59,336

The purposes of the fidelity funds pursuant to Section 186 of the Securities and Futures Act are as follows:

(a) to compensate any person (other than an accredited investor) who has suffered a pecuniary loss from any
defalcation committed

Governance
(i) in the course of, or in connection with, dealing in securities, or the trading of a futures contract;

(ii) by a member of a securities exchange or a futures exchange or by any agent of such member; and

(iii) in relation to any money or other property entrusted to or received:

by that member or any of its agents; or

by that member or any of its agents as trustee or on behalf of the trustees of that money or property.

(b) to pay the Official Assignee or a trustee in bankruptcy within the meaning of the Bankruptcy Act (Cap. 20) if the
available assets of a bankrupt, who is a member of SGX-ST or SGX-DT, are insufficient to satisfy any debts arising Financials
from dealings in securities or trading in futures contracts which have been proved in the bankruptcy by creditors of
the bankrupt member.

(c) to pay a liquidator of a member of SGX-ST or SGX-DT which is being wound up if the available assets of a member
are insufficient to satisfy any debts arising from dealings in securities or trading in futures contracts which have been
proved in the liquidation of the member.

Any reference to dealing in securities or trading of a futures contract refers to such dealing or trading through the
exchange which establishes, keeps and administers the fidelity fund or through a trading linkage of the exchange with an
overseas securities exchange or an overseas futures exchange.
Others

No further provision has been made in the financial year ended 30 June 2016 for contribution to be paid to the securities
and derivatives fidelity funds as the minimum sum of $20 million for each fund as currently required under the Securities
and Futures Act has been met.
138 Singapore Exchange

35. Securities and Derivatives Fidelity Funds (continued)

2016 2015
$000 $000
The assets and liabilities of the Funds are as follows:

Assets
Fixed deposits with banks 59,700 58,800
Bank balance 417 608
Interest receivable 30 27
60,147 59,435

Liabilities
Other payables and accruals 3 7
Taxation 165 87
Deferred tax liabilities 5 5
173 99

Net assets 59,974 59,336

The assets and liabilities of the Funds are not included in the consolidated statement of financial position of the Group as
they are held in trust.

36. Contingent liabilities

At the balance sheet date, the Group and the Companys contingent liabilities are as follows:

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Unsecured guarantees by SGX-DC to banks for standby letters of
credit issued by the banks to Chicago Mercantile Exchange (CME)
for members open positions on CME. These guarantees are
supported by members collateral balances (Note 32(b)) 423,900 476,094

37. Commitments

(a) Operating lease commitments


The Group and Company lease its office premises, data centre and equipment from non-related parties under non-
cancellable operating lease agreements. The leases have varying terms, escalation clauses and renewal rights.

The future aggregate minimum lease payments payable under non-cancellable operating leases contracted for at the
reporting date but not recognised as liabilities, are as follows:

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Not later than one financial year 20,624 21,017 20,025 18,604
Later than one financial year but not later than
five financial years 66,457 53,704 66,205 53,197
Later than five financial years 3,048 3,048
90,129 74,721 89,278 71,801

(b) Capital commitments


Capital commitments contracted for at year end but not recognised in the financial statements are as follows:

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Property, plant and equipment 82
Software 8,305 14,873 256
8,387 14,873 256
Notes to the Financial Statements Annual Report 2016 139

38. Related party transactions

Performance Overview
In addition to the information disclosed elsewhere in the financial statements, the following transactions took place
between the Group and related parties at terms agreed between the parties:

Directors fees and key managements remuneration


Key managements remuneration included fees, salary, bonus, commission and other emoluments (including benefits-in-
kind) computed based on the cost incurred by the Group and the Company, and where the Group or the Company
did not incur any costs, the value of the benefit is included. The directors fees and key managements remuneration are
as follows:

The Group

Group Overview
2016 2015
$000 $000
Salaries and other short-term employee benefits 12,907 13,759
Employers contribution to Central Provident Fund 121 120
Share-based payment to key management 2,114 8,195
15,142 22,074

Included in the above is total remuneration to directors of the Company amounting to $5,162,000 (2015: $10,000,000).

During the financial year, 237,300 shares (2015: 590,800 shares) under SGX performance share plan and 264,100 shares

Value Creation & Sustainability


(2015: 590,800 shares) under SGX deferred long-term incentives scheme were granted to key management of the Group.
The shares were granted under the same terms and conditions as those offered to other employees of the Company.

39. Financial risk management

Financial risk management objectives and policies


The Group is exposed to market risk (including currency risk, price risk and interest rate risk), credit risk and liquidity risk
arising from its business activities. The Groups overall risk management strategy seeks to minimise adverse effects from
the unpredictability of financial markets on the Groups financial performance.

The Board of Directors has overall responsibility for the oversight of financial risk management for the Group. The Risk

Governance
Management Committee (RMC) assists the Board in discharging its oversight responsibility. The RMCs primary function
is to review, recommend to the Board for approval, and where authority is delegated by the Board, approve:

(1) the type and level of business risks (risk appetite) that the Group undertakes on an integrated basis to achieve its
business strategy; and
(2) the frameworks and policies for managing risks that are consistent with its risk appetite.

Management is responsible for identifying, monitoring and managing the Groups financial risk exposures.

The main financial risks that the Group is exposed to and how they are managed are set out below.

Market risk Currency risk Financials


The Group managed its main currency exposure as follows:

(a) Revenue receivables from clearing of derivative products


Interest receivables from placements of margin deposits
The Groups revenue from the clearing of derivative products is mainly in SGD and USD. Interest receivables from
placements of margin deposits with banks are mainly denominated in USD, JPY and Euro. For these receivables
denominated in USD, JPY and Euro, the Group manages the currency exposure through currency forward contracts
which are designated as cash flow hedges. Upon settlement of the currency forward contracts and payment
obligations denominated in foreign currency, any excess foreign currencies are converted back to SGD in a timely
Others

manner to minimise currency exposure. As at 30 June 2016 and 30 June 2015, there are no significant currency risk
exposures arising from receivables. These receivables are also exposed to credit risks.

(b) Investment in available-for-sale financial asset


The Company has invested in unlisted equity security in BSE. This investment is denominated in INR and forms
part of the Groups long-term strategic investments in line with its strategy to position SGX as an Asian Gateway.
Management monitors the Groups currency exposure by tracking the INR currency movement on a regular basis.
As this investment is long-term in nature, the Group does not hedge the currency exposure of this investment. This
investment is also exposed to price risk.
140 Singapore Exchange

39. Financial risk management (continued)

Market risk Currency risk (continued)


(c) Cash and cash equivalents
As at 30 June 2016 and 30 June 2015, the cash balances of the Group and the Company are mainly denominated in
SGD and USD. USD cash balances placed in banks to meet the short-term USD payment obligations were not hedged.
The cash balances are also exposed to credit risks.

The Group and Companys currency exposures are as follows:

The Group
At 30 June 2016
SGD (a) USD INR HKD Others Total
$000 $000 $000 $000 $000 $000
Financial assets
Cash and cash equivalents 860,970 4,489 27 820 866,306
Trade and other receivables
Daily settlement of accounts for
due contracts and rights 686,409 73,527 2,942 762,878
Receivables under NEMS 81,702 81,702
Others 65,985 3,308 16 99 264 69,672
Available-for-sale financial asset 44,956 44,956

Financial liabilities
Trade and other payables
Daily settlement of accounts for
due contracts and rights (686,409) (73,527) (2,942) (762,878)
Payables under NEMS (89,904) (89,904)
Others (135,128) (24,162) (4) (72) (816) (160,182)
Currency exposure 783,625 (16,365) 44,995 27 268 812,550
Currency forward contracts (b) 81,675 1,155 82,830

The SGD balances have been included for completeness.


(a)

Currency forward contracts entered by the Group are to hedge future revenue receivables arising from clearing of various derivative
(b)

products denominated in USD, interest receivables denominated in USD, JPY and EUR, and capital expenditure denominated in USD.

The Group
At 30 June 2015
SGD (a) USD INR HKD Others Total
$000 $000 $000 $000 $000 $000
Financial assets
Cash and cash equivalents 836,543 11,435 46 1,878 849,902
Trade and other receivables
Daily settlement of accounts for
due contracts and rights 355,011 60,735 583 1 416,330
Receivables under NEMS 134,122 134,122
Others 72,029 10,815 58 123 3,634 86,659
Available-for-sale financial asset 50,956 50,956

Financial liabilities
Trade and other payables
Daily settlement of accounts for
due contracts and rights (355,011) (60,735) (583) (1) (416,330)
Payables under NEMS (141,402) (141,402)
Others (129,431) (32,001) (29) (6) (934) (162,401)
Currency exposure 771,861 (9,751) 51,031 117 4,578 817,836
Currency forward contracts (b) 37,382 6,649 44,031

The SGD balances have been included for completeness.


(a)

Currency forward contracts entered by the Group are to hedge future revenue receivables arising from clearing of various derivative
(b)

products denominated in USD, interest receivables denominated in USD, JPY and EUR, and capital expenditure denominated in USD.
Notes to the Financial Statements Annual Report 2016 141

The Company

Performance Overview
At 30 June 2016
SGD (a) USD INR Others Total
$000 $000 $000 $000 $000
Financial assets
Cash and cash equivalents 439,785 640 27 273 440,725
Trade and other receivables 7,722 27 16 69 7,834
Available-for-sale financial asset 44,956 44,956

Financial liabilities
Trade and other payables (370,554) (4) (334) (370,892)

Group Overview
Currency exposure 76,953 667 44,995 8 122,623
Currency forward contracts

The SGD balances have been included for completeness.


(a)

The Company
At 30 June 2015
SGD (a) USD INR Others Total
$000 $000 $000 $000 $000
Financial assets
Cash and cash equivalents 435,533 482 46 376 436,437

Value Creation & Sustainability


Trade and other receivables 5,532 37 58 67 5,694
Available-for-sale financial asset 50,956 50,956

Financial liabilities
Trade and other payables (418,512) (531) (29) (43) (419,115)
Currency exposure 22,553 (12) 51,031 400 73,972
Currency forward contracts (b) 1,614 1,614

The SGD balances have been included for completeness.


(a)

Currency forward contracts entered by the Company are to hedge capital expenditure denominated in USD.
(b)

Governance
A currency risk sensitivity analysis is not provided as the Group and the Company are not expected to have significant
currency exposures other than from available-for-sale financial asset.

The currency risk sensitivity analysis for available-for-sale financial asset is as follows:

Impact to other
Impact to comprehensive
Change in profit after tax income
Assumption assumption $000 $000
INR currency movement Increase by 0.5% 200
Decrease by 0.5% 300

Market risk Price risk Financials

The Group is exposed to equity security price risk arising from its investment in BSE, an unlisted long-term strategic
investment classified as available-for-sale financial asset. In managing the price risk, the management of SGX
regularly monitors the latest developments and business performance of BSE and assesses the financial performance
of BSE on an on-going basis.

The fair value of available-for-sale financial asset is sensitive to changes in the assumptions used. The impact on fair
value of available-for-sale financial asset from a reasonable change in these assumptions is as follows:

Impact to other
Others

Impact to comprehensive
Change in profit after tax income
Assumption assumption $000 $000
Long term growth rate Increase by 0.5% 1,000
Decrease by 0.5% 1,000

Discount rate Increase by 0.5% 1,500


Decrease by 0.5% 1,700
142 Singapore Exchange

39. Financial risk management (continued)

Market risk Interest rate risk


Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. Fair value interest rate risk is the risk that the fair value of a financial instrument will
fluctuate due to changes in market interest rates.

The Group and the Company are not subject to significant cash flow and fair value interest rate risks as the Groups and
the Companys fixed deposit placements are mainly short-term in nature. Fixed deposits are placed with banks that offer
the most competitive interest rates.

The tables below set out the Groups and the Companys financial assets and liabilities at carrying amounts, categorised
by the earlier of contractual re-pricing or maturity dates.

The Group
Variable rates Fixed rates
Non-
Less than 6 to 12 Less than 6 to 12 Over 1 interest
6 months months 6 months months year bearing Total
$000 $000 $000 $000 $000 $000 $000
At 30 June 2016

Financial assets
Cash and cash equivalents 58,352 598,207 202,021 7,726 866,306
Trade and other receivables 8 2 914,242 914,252
Available-for-sale financial asset 44,956 44,956

Financial liabilities
Trade and other payables (1,012,964) (1,012,964)
Net financial assets/(liabilities) 58,352 598,215 202,023 (46,040) 812,550

At 30 June 2015

Financial assets
Cash and cash equivalents 32,121 756,371 50,000 11,410 849,902
Trade and other receivables 8 3 637,100 637,111
Available-for-sale financial asset 50,956 50,956

Financial liabilities
Trade and other payables (720,133) (720,133)
Net financial assets/(liabilities) 32,121 756,379 50,003 (20,667) 817,836
Notes to the Financial Statements Annual Report 2016 143

Performance Overview
The Company
Variable rates Fixed rates
Non-
Less than 6 to 12 Less than 6 to 12 Over 1 interest
6 months months 6 months months year bearing Total
$000 $000 $000 $000 $000 $000 $000
At 30 June 2016

Financial assets
Cash and cash equivalents 2,320 436,200 2,205 440,725
Trade and other receivables 3 1 7,830 7,834

Group Overview
Available-for-sale financial asset 44,956 44,956

Financial liabilities
Trade and other payables (370,892) (370,892)
Net financial assets/(liabilities) 2,320 436,203 1 (315,901) 122,623

At 30 June 2015

Financial assets
Cash and cash equivalents 1,042 426,230 9,165 436,437
Trade and other receivables 4 1 5,689 5,694

Value Creation & Sustainability


Available-for-sale financial asset 50,956 50,956

Financial liabilities
Trade and other payables (419,115) (419,115)
Net financial assets/(liabilities) 1,042 426,234 1 (353,305) 73,972

As the Group and the Company are not exposed to significant interest rate risks, a sensitivity analysis is not provided.

Credit risk
Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the

Governance
Group and the Company. The major classes of financial assets of the Group and of the Company are trade receivables and
cash deposits.

The Group manages its main credit exposures as follows:

(a) Cash deposits


Cash balances of the Group and the Company are mainly placed in fixed deposits with financial institutions of high
credit quality. The Board has approved policies that limit the maximum credit exposure to each financial institution.
Exposure and compliance with counterparty limits set by the RMC are monitored by the relevant business units
and reported by the Risk Management unit to the RMC. The Group placed 83% (2015: 77%) of its cash and cash
equivalents with 4 (2015: 4) banks. The Company placed 99% (2015: 93%) of its cash and cash equivalents with 4
(2015: 4) banks. Financials

(b) Clearing and settlement


In the normal course of business as clearing houses, SGX-DC and CDP act as central counterparties (CCP) for every
transaction received by or matched through the Groups facilities. As CCP, each clearing house substitutes itself as the
buyer to the selling clearing member, and seller to the buying clearing member, and assumes all rights and obligations
to the counterparty. As a result, each clearing house faces considerable credit risk exposure should any of its clearing
members be unable to meet its settlement obligations to the clearing house, resulting in a default. The Group has in
place a sound and transparent risk management and regulatory framework governing the operations of securities and
derivatives markets. On an on-going basis, the Group mitigates its counterparty risk through active monitoring and
management of its exposures to clearing members by having in place a system of financial safeguards.
Others
144 Singapore Exchange

39. Financial risk management (continued)

Credit risk (continued)


(b) Clearing and settlement (continued)
Credit risk management practices
The Group mitigates its exposures to risk by admitting clearing members which meet prescribed capital and financial
requirements and have risk management systems to monitor their exposures. On an on-going basis, a clearing
member must continue to comply with the financial requirements, and also set aside capital commensurate with
its risk exposures. In addition, it must ensure that it has the necessary systems and procedures to preserve sound
liquidity and financial position at all times.

Both SGX-DC and CDP have well-established risk management systems to monitor and measure the risk exposures
of its members. In addition, SGX-DC and CDP require all derivative positions, securities contracts and marginable
futures contracts to be sufficiently collateralised at all times and these collaterals protect SGX-DC and CDP against
potential losses. SGX-DC also revalues and settles the daily mark-to-market variations with clearing members
to prevent losses from accumulating. CDP requires all positions in securities contracts and Extended Settlement
Contracts, being marginable futures contracts, to be sufficiently collateralised and these collaterals protect CDP
against cumulative mark-to-market and potential losses. CDP also requires clearing members to monitor compliance
with risk management measures such as monitoring for large exposures.

Financial safeguards
A clearing fund has been established for each of the securities and derivatives markets to be used in support of
the clearing houses roles as CCP. The Group and the relevant clearing members are required to contribute to the
respective clearing funds.

Trade receivables arising from settlement of securities trades


Settlement for all securities transactions of securities clearing members are effected through the Groups subsidiary,
CDP. Such settlements can be effected through designated settlement banks.

The receivables from clearing members and settlement banks included in trade receivables represent the aggregate
of net settlement obligations of each of the clearing members and settlement banks to CDP for the last three trading
days of the financial year. At 30 June 2016, there were 25 (2015: 25) securities clearing members and 7 (2015: 6)
designated settlement banks. The Group may have concentration risk exposure to these securities clearing members
and settlement banks with regards to their net settlement obligations to CDP. The settlement exposure of CDP to
each securities clearing member or settlement bank fluctuates daily according to the net trading position (net buy
or net sell) of each securities clearing member and the extent to which these settlement obligations are effected
through the settlement banks.

(c) Receivables under NEMS


In relation to NEMS receivables in Note 14, EMC is required to ensure that market participants maintain certain levels
of prudential security in discharging its obligations under the NEMS Market Rules (Market Rules). EMC is entitled to
recover any default receivables from all market participants under the Market Rule and credit risk exposure to NEMS
receivables is minimised.

Under the Market Rules, each market participant has to provide credit support which is not less than 30 times of
individual estimated average daily exposure. The Market Rules specify the type of credit support to be provided
and assigned to EMC. These include bankers guarantees or irrevocable commercial letter of credit from reputable
financial institutions, cash deposits and Singapore Government Treasury bills. The credit support received as at 30
June 2016 were in the form of bankers guarantees and cash deposits and have an aggregate value of $318,520,000
(2015: $328,953,000). There is no significant concentration of credit risk for receivables under NEMS.
Notes to the Financial Statements Annual Report 2016 145

(d) Trade receivables (excluding balances arising from clearing and settlement of securities trades and NEMS)

Performance Overview
Trade receivables of the Group and the Company comprise receivables from trading and clearing members, listed
companies and other entities. Exposure from these trade receivables is continuously monitored and followed up by
Finance and relevant business units.

Management believes that the credit risk with respect to trade receivables is limited. Impairment allowances are
made for debts that are outstanding above 360 days and debtors that are under judicial management, scheme of
arrangement or other financial difficulties. Management believes that there is no other additional credit risk beyond
the amount of allowance for impairment made in these financial statements.

The Group, excluding the balances arising from clearing and settlement of trade and NEMS, has no significant
concentration of credit risk on its trade receivables.

Group Overview
The Company has no significant concentration of credit risk on its trade receivables.

The maximum exposure to credit risk for trade receivables and cash deposits is the carrying amount of the financial
assets presented on the statement of financial position as the Group and the Company do not hold any collateral
against these financial assets.

As clearing houses, SGX-DC and CDP have general lien on all monies and other properties deposited by clearing
members. The clearing house may combine any account of the clearing member with its liabilities to the clearing
house. Such funds may be applied towards satisfaction of liabilities of the clearing member to the clearing house.

Value Creation & Sustainability


(e) Financial assets that are neither past due nor impaired
All of the Groups cash deposits are not impaired as the deposits are placed with banks of high credit quality.

Trade receivables that are neither past due nor impaired comprise companies with good collection track record with
the Group. As at 30 June 2016, 99.7% (2015: 99.2%) and 93.0% (2015: 91.9%) of the Group and the Companys trade
receivables fall into this category.

(f) Financial assets that are past due and/or impaired


There is no other class of financial assets that is past due and/or impaired except for trade receivables.

Governance
The age analysis of trade receivables past due but not impaired is as follows:

The Group The Company


2016 2015 2016 2015
$000 $000 $000 $000
Past due up to 90 days 484 2,893 220 293
Past due 91 days to 360 days 483 228 147 61
967 3,121 367 354

The carrying amount of trade receivables individually determined to be impaired and the movement in the related
allowance for impairment are as follows:
Financials
The Group The Company
2016 2015 2016 2015
$000 $000 $000 $000
Gross amount 1,668 1,654 1 5
Less: Allowance for impairment (1,668) (1,654) (1) (5)

Balance at beginning of financial year 1,654 2,162 5 21


Allowance made 1,084 1,422 27 345
Others

Allowance utilised (356) (879) (5)


Allowance written back (714) (1,051) (26) (361)
Balance at end of financial year 1,668 1,654 1 5
146 Singapore Exchange

39. Financial risk management (continued)

Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset.

(a) Liabilities related risk


The Group has minimal liquidity risk as it maintains sufficient cash for daily operations through prudent liquidity risk
management. The Group has no external borrowings.

The financial liabilities of the Group and Company are analysed into the relevant maturity buckets based on the
remaining period from the balance sheet date to the contractual maturity dates. The amounts disclosed in the table
below are contractual undiscounted cash flows.

The Group
Up to > 3 months Above
3 months to 1 year 1 year Total
$000 $000 $000 $000
At 30 June 2016
Financial liabilities
Trade and other payables (a) 1,012,562 90 312 1,012,964

Included the following:


(a)

- $762,878,000 payables to clearing members and settlement banks for daily settlement of accounts for due contracts and rights with a
corresponding amount in trade receivables; and
- $89,904,000 payables under NEMS with corresponding amounts in cash and cash equivalents and trade receivables.

Up to > 3 months Above


3 months to 1 year 1 year Total
$000 $000 $000 $000
At 30 June 2015
Financial liabilities
Trade and other payables (b) 718,298 28 1,807 720,133

Included the following:


(b)

- $416,330,000 payables to clearing members and settlement banks for daily settlement of accounts for due contracts and rights with a
corresponding amount in trade receivables; and
- $141,402,000 payables under NEMS with corresponding amounts in cash and cash equivalents and trade receivables.

The Company
Up to > 3 months Above
3 months to 1 year 1 year Total
$000 $000 $000 $000
At 30 June 2016
Financial liabilities
Trade and other payables 370,892 370,892

At 30 June 2015
Financial liabilities
Trade and other payables 419,115 419,115

As at 30 June 2016, the gross notional value of outstanding currency forward contracts held by the Group and
Company was $82,830,000 (2015: $44,031,000) and nil (2015: $1,614,000), respectively. The Group and the
Companys outstanding currency forward contracts that would be settled on a gross basis are analysed into relevant
maturity buckets based on the remaining contractual maturity dates as follows:
Notes to the Financial Statements Annual Report 2016 147

At 30 June 2016 At 30 June 2015

Performance Overview
Up to > 3 months Up to > 3 months
3 months to 1 year Total 3 months to 1 year Total
The Group $000 $000 $000 $000 $000 $000
Currency forward contracts

gross outflows 36,782 46,036 82,818 20,958 23,087 44,045


gross inflows 38,206 47,211 85,417 21,085 23,187 44,272

At 30 June 2016 At 30 June 2015


Up to > 3 months Up to > 3 months

Group Overview
3 months to 1 year Total 3 months to 1 year Total
The Company $000 $000 $000 $000 $000 $000
Currency forward contracts

gross outflows 1,528 1,528


gross inflows 1,614 1,614

(b) Contingent liabilities related risk


At the balance sheet date, the following guarantees may impact the liquidity positions in the earliest period in which
the guarantees are called upon:

Value Creation & Sustainability


The Group The Company
2016 2015 2016 2015
$000 $000 $000 $000
Unsecured guarantees by SGX-DC to banks for standby
letters of credit issued by the banks to Chicago
Mercantile Exchange 423,900 476,094

The settlement obligation of the above contingent liabilities is not determinable as the obligation arises from the
occurrence of future events that are not within the control of the Group and the Company.

(c) Clearing and settlement-related risk

Governance
The clearing houses of the Group, CDP and SGX-DC, act as the novated counterparty for transactions of approved
securities and derivatives. The Group is exposed to liquidity risk should any clearing member default. The Group
has secured sufficient committed bank credit facilities of $567,000,000 (2015: $974,000,000), comprising of
$567,000,000 (2015: $774,000,000) committed unsecured credit lines and nil (2015: $200,000,000) committed
share financing, for prudent risk management and to maintain adequate liquid resources.

Fair value measurements


The following table presents assets and liabilities measured at fair value and classified by level of the following fair value
measurement hierarchy:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1); Financials

(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and

(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
Others
148 Singapore Exchange

39. Financial risk management (continued)

Fair value measurements (continued)

Level 1 Level 2 Level 3 Total


$000 $000 $000 $000
The Group

At 30 June 2016
Assets
Available-for-sale financial asset 44,956 44,956
Derivative financial instruments 2,665 2,665

Liabilities
Derivative financial instruments 66 66

At 30 June 2015
Assets
Available-for-sale financial asset 50,956 50,956
Derivative financial instruments 311 311

Liabilities
Derivative financial instruments 84 84

The Company

At 30 June 2016
Assets
Available-for-sale financial asset 44,956 44,956

At 30 June 2015
Assets
Available-for-sale financial asset 50,956 50,956
Derivative financial instruments 86 86

There were no transfers between Level 1 and 2 during the year.

The fair values of currency forward contracts have been calculated using the rates quoted by the Groups bankers to
terminate the contracts at the balance sheet date.

As the available-for-sale financial asset is not traded in an active market, its fair value is determined by using discounted
cash flow model.

The available-for-sale financial asset has been classified under Level 3 in the fair value measurement hierarchy as
the valuation technique includes market premium on the discount rate, which is an unobservable market data. The
movement in fair value arising from reasonably possible changes to the market premium on the discount rate is assessed
to be insignificant.

Impairment loss recognised during the financial year on available-for-sale financial asset is disclosed in Note 10 and
Note 16.

The carrying amounts of cash and cash equivalents, trade and other receivables, and trade and other payables are
assumed to approximate their fair values.
Notes to the Financial Statements Annual Report 2016 149

Offsetting financial assets and financial liabilities

Performance Overview
The Group reports financial assets and financial liabilities on a net basis on the statement of financial position where
there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or to
realise the asset and settle the liabilities simultaneously.

The following table shows the effect of netting arrangements on financial assets and liabilities that are reported net on
the statement of financial position.

(a) Financial assets subject to offsetting arrangements

As at 30 June 2016
Less: Gross

Group Overview
amounts Net amounts
of recognised of financial assets
financial liabilities presented in
Gross amounts set off in the the statement
of recognised statement of of financial
financial assets financial position position (1)
$000 $000 $000
Receivables from clearing members and settlement banks - Daily
settlement of accounts for due contracts and rights 6,284,077 (5,521,199) 762,878

The collaterals deposited by clearing members and settlement banks cannot be attributed directly to the individual transactions.
(1)

Value Creation & Sustainability


For information on the collaterals, please refer to Note 32(a).

As at 30 June 2015
Less: Gross amounts Net amounts
of recognised of financial assets
financial liabilities presented in
Gross amounts set off in the the statement
of recognised statement of of financial
financial assets financial position position (1)
$000 $000 $000
Receivables from clearing members and settlement banks - Daily

Governance
settlement of accounts for due contracts and rights 5,309,323 (4,892,993) 416,330

The collaterals deposited by clearing members and settlement banks cannot be attributed directly to the individual transactions.
(1)

For information on the collaterals, please refer to Note 32(a).

Financials
Others
150 Singapore Exchange

39. Financial risk management (continued)

Offsetting financial assets and financial liabilities (continued)


(b) Financial liabilities subject to offsetting arrangements

As at 30 June 2016
Less: Gross amounts Net amounts
of recognised of financial liabilities
financial assets presented in
Gross amounts set off in the the statement
of recognised statement of of financial
financial liabilities financial position position (1)
$000 $000 $000
Payables to clearing members and settlement banks - Daily
settlement of accounts for due contracts and rights 6,284,077 (5,521,199) 762,878

The collaterals deposited by clearing members and settlement banks cannot be attributed directly to the individual transactions. For
(1)

information on the collaterals, please refer to Note 32(a).

As at 30 June 2015
Less: Gross amounts Net amounts
of recognised of financial liabilities
financial assets presented in
Gross amounts set off in the the statement
of recognised statement of of financial
financial liabilities financial position position (1)
$000 $000 $000
Payables to clearing members and settlement banks - Daily
settlement of accounts for due contracts and rights 5,309,323 (4,892,993) 416,330

The collaterals deposited by clearing members and settlement banks cannot be attributed directly to the individual transactions. For
(1)

information on the collaterals, please refer to Note 32(a).

The amounts shown in the tables above that have been offsetted in the statements of financial position are
measured using the same basis.

40. Capital requirement and management

The Groups capital management objectives are to optimise returns to shareholders whilst supporting the growth
requirements of the business and fulfilling its obligations to the relevant regulatory authorities and other stakeholders.

Effective 1 July 2008, the Group is required, under the Regulatory Capital Framework (the Framework) formalised
by the Monetary Authority of Singapore to maintain adequate financial resources to meet prudential requirements
that commensurate with the operational risk, investment risk and the counterparty default risk arising from its central
counterparty clearing and settlement activities. With respect to the counterparty default risk, each of the Groups
clearing house subsidiaries is required to contribute capital to maintain a clearing fund that is sufficient to cover
simultaneous default of the member that is responsible for largest credit exposure, its affiliates and the two financially
weakest members under simulated extreme but plausible market conditions. The Group has been in compliance with the
Framework since 1 July 2008.

Given the dynamic nature of the Groups business and the framework, the Group regularly reviews and monitors its
capital position to ensure that the business activities and growth are prudently funded. In addition, the Group will seek
opportunities to optimise shareholders returns by creating a more efficient capital structure to reduce the overall cost of
capital. In line with its dividend policy, SGX maintains a base dividend commitment to its shareholders.
Notes to the Financial Statements Annual Report 2016 151

41. Comparatives

Performance Overview
Revision to presentation of statements of comprehensive income and segment information
Effective from 1 January 2016, SGX Group implemented changes to the organisational structure to better serve
customers and improve operational efficiency. The sales and product teams were combined to form three vertical
businesses of Equities and Fixed Income (EQFI), Derivatives and Market Data and Connectivity (MDC).

Following the changes, the presentation of statements of comprehensive income and segment information has been
revised as follows:

Statements of comprehensive income

Group Overview
(a) The revenue line previously known as Securities has been renamed to Securities Trading and Clearing.

(b) The revenue line previously known as Depository Services has been renamed to Post Trade Services.

(c) The revenue lines Issuer Services, Securities Trading and Clearing and Post Trade Services have been consolidated
under EQFI.

(d) The revenue line Other, under Operating revenue, has been reclassified to EQFI, Derivatives and Other revenue
including interest income. The comparatives have been restated.

This is to better reflect the nature of these revenue lines. Refer to the statement of comprehensive income for the

Value Creation & Sustainability


revised presentation.

Segment information
(a) The segment previously known as Securities Market has been renamed to EQFI. This segment continues to
consolidate the results and balance sheet of Issuer Services, Securities Trading and Clearing and Post Trade Services
but excludes the results and balance sheet of MDC related to the securities market.

(b) The segment previously known as Derivatives Market has been renamed to Derivatives. This segment continues to
consolidate the results and balance sheet of Derivatives but excludes the results and balance sheet of MDC related to
the derivatives market.

Governance
(c) MDC is disclosed as a separate segment.

(d) The Corporate segment is a non-operating segment, and comprises results and balance sheet of the corporate
activities which are not allocated to the other operating segments described above.

(e) The segment information has been reclassified and accordingly, the comparatives for the segment information of the
Group have been restated.

Refer to Note 29 for the revised presentation.

Financials
Others
152 Singapore Exchange

42. New accounting standards and FRS interpretations

Below are the mandatory standards, amendments and interpretations to existing standards that have been published,
and are relevant for the Groups accounting periods beginning on or after 1 July 2016 or later periods and which the
Group has not early adopted:

Effective date (annual


periods beginning
FRS Title on or after)
Amendments to FRS 115 Revenue from Contracts with Customers 1 January 2018
FRS 109 Financial Instruments 1 January 2018

The Group is presently assessing the impact of adopting these new accounting standards, amendments and
interpretations. The Group has not considered the impact of accounting standards issued after the balance sheet date.

43. Subsequent events

(a) Market disruption


Subsequent to the financial year ended 30 June 2016, the Company experienced a technology-related service
disruption on 14 July 2016. The Company has identified the root causes and is taking corrective actions as required.
Expenses related to the market disruption will be recorded as and when incurred.

(b) Establishment of subsidiary to undertake all front-line regulatory functions of the Company
On 18 July 2016, the Company announced its intention to establish a subsidiary with its own separate Board, which
will undertake all of the regulatory functions that the Company is currently performing. The move aims to further
enhance the governance of the Company as a self-regulatory organisation by making more explicit the segregation
of its regulatory functions from its commercial and operating activities. The set up of the regulatory subsidiary is
expected to take place by the second half of calendar year 2017.

44. Authorisation of financial statements

These financial statements have been authorised for issue by the Board of Directors on 27 July 2016.
Statistics of Shareholdings Annual Report 2016 153

Statistics of Shareholdings

Performance Overview
As at 2 August 2016

Share Capital : S$ 410,553,725.94


Number of Issued and Paid-up Shares : 1,071,642,400
Class of Shares : Ordinary shares
Voting Rights : One vote per share.
The Company cannot exercise any voting rights in respect of shares held by
it as treasury shares.

Group Overview
Distribution of Shareholdings
No. of shares
No. of (excluding
Size of shareholdings shareholders % treasury shares) %1
1 99 93 0.25 3,273 0.00
100 1,000 11,459 30.29 11,047,609 1.03
1,001 10,000 22,347 59.07 87,718,652 8.20
10,001 1,000,000 3,904 10.32 152,810,760 14.28
1,000,001 and above 27 0.07 818,277,966 76.49

Value Creation & Sustainability


Total 37,830 100.00 1,069,858,260 100.00

Based on information available to the Company as at 2 August 2016 approximately 99.93% of the issued ordinary shares of the Company
are held by the public and, therefore, Rule 723 of the Listing Manual issued by the Singapore Exchange Securities Trading Limited is
complied with.

Twenty Largest Shareholders


No. Name No. of shares %1
1 SEL HOLDINGS PTE LTD2 249,991,184 23.37
2 CITIBANK NOMINEES SINGAPORE PTE LTD 226,196,677 21.14
3 DBS NOMINEES (PRIVATE) LIMITED 98,223,733 9.18

Governance
4 HSBC (SINGAPORE) NOMINEES PTE LTD 63,159,291 5.90
5 DBSN SERVICES PTE. LTD. 54,572,400 5.10
6 UNITED OVERSEAS BANK NOMINEES (PRIVATE) LIMITED 31,572,973 2.95
7 RAFFLES NOMINEES (PTE) LIMITED 21,941,403 2.05
8 BNP PARIBAS SECURITIES SERVICES SINGAPORE BRANCH 13,746,275 1.28
9 PHILLIP SECURITIES PTE LTD 12,174,478 1.14
10 CITIGROUP GLOBAL MARKETS SINGAPORE SECURITIES PTE. LTD. 9,056,464 0.85
11 MORGAN STANLEY ASIA (SINGAPORE) SECURITIES PTE LTD 5,228,899 0.49
12 DB NOMINEES (SINGAPORE) PTE LTD 5,164,454 0.48
13 OCBC NOMINEES SINGAPORE PRIVATE LIMITED 3,375,576 0.32
14 DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 3,231,400 0.30
15 UOB KAY HIAN PRIVATE LIMITED 3,122,500 0.29 Financials
16 OCBC SECURITIES PRIVATE LIMITED 2,317,119 0.22
17 WONG KONG CHOO 1,745,700 0.16
18 BNP PARIBAS NOMINEES SINGAPORE PTE LTD 1,711,608 0.16
19 LEONG KHUEN NYEAN 1,657,300 0.15
20 MAYBANK KIM ENG SECURITIES PTE. LTD. 1,622,704 0.15
Total 809,812,138 75.68

Percentage is calculated based on the total number of issued shares, excluding treasury shares of the Company.
1

2
Pursuant to section 11(2)(b) of the Exchanges (Demutualisation & Merger) Act 1999 (the Merger Act), SEL Holdings Pte Ltd (SEL), being the special purpose company set up under
the Merger Act to hold the SGX shares for the benefit of the Financial Sector Development Fund, shall not exercise or control the exercise of votes attached to the SGX shares.
Others

Owing to the restriction in the exercise of votes attached to the shares, SEL is not regarded as a substantial shareholder of SGX.

Treasury Shares
Number of ordinary shares held in treasury: 1,784,140
Percentage of such holding against the total number of issued ordinary shares (excluding ordinary shares held in treasury): 0.17%1

Substantial Shareholders
According to the Register of Substantial Shareholders maintained by the Company, the Company had no substantial shareholders as at
2 August 2016.
154 Singapore Exchange

Notice of Annual General Meeting


Singapore Exchange Limited
Company Registration No. 199904940D
(Incorporated in the Republic of Singapore)

NOTICE IS HEREBY GIVEN that the Seventeenth Annual General Meeting of Singapore Exchange Limited (the Company) will be
held at The Star Theatre, Level 5, The Star Performing Arts Centre, 1 Vista Exchange Green, Singapore 138617 on Thursday,
22 September 2016 at 10.00 a.m. to transact the following business:

ROUTINE BUSINESS

1 To receive and adopt the Directors Statement and Audited Financial Statements for the financial year Ordinary Resolution 1
ended 30 June 2016 and the Auditors Report thereon.

2 To declare a final tax exempt dividend of 13 cents per share for the financial year ended 30 June 2016 Ordinary Resolution 2
(Final Dividend).
(FY2015: 16 cents per share)

3 To re-elect the following directors who will be retiring by rotation under Article 99 of the
Constitution of the Company and who, being eligible, offer themselves for re-election as
directors of the Company:

Ms Jane Diplock AO; and Ordinary Resolution 3(a)

Ms Chew Gek Khim. Ordinary Resolution 3(b)

4 To re-elect Ms Lim Sok Hui (Mrs Chng Sok Hui) who will cease to hold office under Article 104 of Ordinary Resolution 4
the Constitution of the Company and who, being eligible, offers herself for re-election as a director
of the Company.

5 To approve (i) the sum of $750,000 to be paid to the Chairman as directors fees, and (ii) the provision Ordinary Resolution 5
to him of a car with a driver, for the financial year ending 30 June 2017.
(Same as for FY2016: $750,000 and a car with a driver)

6 To approve the sum of up to $1,600,000 to be paid to all directors (other than the Chief Executive Ordinary Resolution 6
Officer) as directors fees for the financial year ending 30 June 2017.
(Same as for FY2016: up to $1,600,000 for all directors other than the Chief Executive Officer)

7 To re-appoint PricewaterhouseCoopers LLP as Auditor of the Company and to authorise the Ordinary Resolution 7
directors to fix its remuneration.

SPECIAL BUSINESS

To consider and, if thought fit, to pass with or without modifications, the following resolutions, of which
Resolutions 8 and 9 will be proposed as Ordinary Resolutions and Resolution 10 will be proposed as a
Special Resolution:

8 That authority be and is hereby given to the directors of the Company to: Ordinary Resolution 8

(a) (i) issue shares of the Company (shares) whether by way of rights, bonus or otherwise;
and/or

(ii) make or grant offers, agreements or options (collectively, Instruments) that might
or would require shares to be issued, including but not limited to the creation and
issue of (as well as adjustments to) warrants, debentures or other instruments
convertible into shares,

at any time and upon such terms and conditions and for such purposes and to such persons
as the directors may in their absolute discretion deem fit; and
Notice of Annual General Meeting Annual Report 2016 155

Performance Overview
(b) (notwithstanding the authority conferred by this Resolution may have ceased to be

Group Overview
in force) issue shares in pursuance of any Instrument made or granted by the
directors while this Resolution was in force,

provided that:

(1) the aggregate number of shares to be issued pursuant to this Resolution (including shares
to be issued in pursuance of Instruments made or granted pursuant to this Resolution) does
not exceed 50 per cent. of the total number of issued shares (excluding treasury shares) (as
calculated in accordance with sub-paragraph (2) below), of which the aggregate number of
shares to be issued other than on a pro rata basis to shareholders of the Company (including
shares to be issued in pursuance of Instruments made or granted pursuant to this Resolution)
does not exceed 10 per cent. of the total number of issued shares (excluding treasury shares)

Value Creation & Sustainability


(as calculated in accordance with sub-paragraph (2) below);

(2) (subject to such manner of calculation as may be prescribed by the Singapore Exchange
Securities Trading Limited (SGX-ST)) for the purpose of determining the aggregate number
of shares that may be issued under sub-paragraph (1) above, the percentage of issued shares
shall be based on the total number of issued shares (excluding treasury shares) at the time
this Resolution is passed, after adjusting for:

(i) new shares arising from the conversion or exercise of any convertible securities or
share options or vesting of share awards which are outstanding or subsisting at the
time this Resolution is passed; and

Governance
(ii) any subsequent bonus issue or consolidation or subdivision of shares;

(3) in exercising the authority conferred by this Resolution, the Company shall comply with the
provisions of the Listing Manual of the SGX-ST for the time being in force (unless such
compliance has been waived by the Monetary Authority of Singapore) and the Constitution
for the time being of the Company; and

(4) (unless revoked or varied by the Company in general meeting) the authority conferred by
this Resolution shall continue in force until the conclusion of the next Annual General
Meeting of the Company or the date by which the next Annual General Meeting of the
Company is required by law to be held, whichever is the earlier.

Financials
9 That: Ordinary Resolution 9

(a) for the purposes of Sections 76C and 76E of the Companies Act, Chapter 50 of Singapore
(the Companies Act), the exercise by the directors of the Company of all the powers of the
Company to purchase or otherwise acquire issued ordinary shares of the Company (Shares)
not exceeding in aggregate the Maximum Percentage (as hereafter defined), at such price or
prices as may be determined by the directors from time to time up to the Maximum Price (as
hereafter defined), whether by way of:

(i) market purchase(s) on the SGX-ST and/or any other securities exchange on which
the Shares may for the time being be listed and quoted (Other Exchange); and/or
Others

(ii) off-market purchase(s) (if effected otherwise than on the SGX-ST or, as the case may
be, Other Exchange) in accordance with any equal access scheme(s) as may be
determined or formulated by the directors as they consider fit, which scheme(s)
shall satisfy all the conditions prescribed by the Companies Act,

and otherwise in accordance with all other laws and regulations and rules of the SGX-ST
or, as the case may be, Other Exchange, as may for the time being be applicable, be and
is hereby authorised and approved generally and unconditionally (the Share Purchase
Mandate);
156 Singapore Exchange

Notice of Annual General Meeting


Singapore Exchange Limited
Company Registration No. 199904940D
(Incorporated in the Republic of Singapore)

(b) unless varied or revoked by the Company in general meeting, the authority conferred on the
directors of the Company pursuant to the Share Purchase Mandate may be exercised by the
directors at any time and from time to time during the period commencing from the date of
the passing of this Resolution and expiring on the earliest of:

(i) the date on which the next Annual General Meeting of the Company is held;

(ii) the date by which the next Annual General Meeting of the Company is required by
law to be held; and

(iii) the date on which purchases and acquisitions of Shares pursuant to the Share
Purchase Mandate are carried out to the full extent mandated;

(c) in this Resolution:

Average Closing Price means the average of the closing market prices of a Share over the
five consecutive trading days on which the Shares are transacted on the SGX-ST or, as the
case may be, Other Exchange, immediately preceding the date of the market purchase by
the Company or, as the case may be, the date of the making of the offer pursuant to the off-
market purchase, and deemed to be adjusted, in accordance with the listing rules of the
SGX-ST, for any corporate action that occurs after the relevant five-day period;

date of the making of the offer means the date on which the Company makes an offer for
the purchase or acquisition of Shares from holders of Shares stating therein the relevant
terms of the equal access scheme for effecting the off-market purchase;

Maximum Percentage means that number of issued Shares representing 10 per cent. of
the total number of issued Shares as at the date of the passing of this Resolution (excluding
any Shares which are held as treasury shares as at that date); and

Maximum Price in relation to a Share to be purchased or acquired, means the purchase


price (excluding brokerage, commission, applicable goods and services tax and other related
expenses) which shall not exceed:

(i) in the case of a market purchase of a Share, 105 per cent. of the Average Closing
Price of the Shares; and

(ii) in the case of an off-market purchase of a Share, 110 per cent. of the Average Closing
Price of the Shares; and

(d) the directors of the Company and/or any of them be and are hereby authorised to complete
and do all such acts and things (including executing such documents as may be required) as
they and/or he/she may consider expedient or necessary or in the interests of the Company
to give effect to the transactions contemplated and/or authorised by this Resolution.

10 That the regulations contained in the new Constitution submitted to this meeting and, for the purpose Special Resolution 10
of identification, subscribed to by the Chairman thereof, be approved and adopted as the Constitution
of the Company in substitution for, and to the exclusion of, the existing Constitution.

By Order of the Board

Ding Hui Yun


Company Secretary
Singapore Exchange Limited
30 August 2016
Notice of Annual General Meeting Annual Report 2016 157

Performance Overview
EXPLANATORY NOTES

Group Overview
1 Ordinary Resolution 2 is to declare a final tax exempt dividend of 13 cents per share for the financial year ended 30 June 2016
(FY2016). Together with the sum of 15 cents per share of interim base dividends declared over the first three quarters of
FY2016, the total dividend for FY2016 is 28 cents per share. The total dividend for FY2016 remains unchanged from that for
the preceding financial year, except that in the preceding financial year, the total dividend comprised 12 cents per share of
interim base dividends and 16 cents per share of final dividend. From FY2016 onwards, the Companys dividend policy is to
declare a base dividend of 5 cents per share per quarter, an increase of 1 cent per share per quarter compared to the preceding
financial year. For each financial year, the Company intends to pay as dividend, an amount which is no less than 80% of the
annual net profit after tax or 20 cents per share, whichever is higher. All dividends are tax exempted.

2 Ordinary Resolutions 3(a) & 3(b) are to re-elect Ms Jane Diplock AO and Ms Chew Gek Khim who will be retiring by rotation

Value Creation & Sustainability


under Article 99 of the Constitution of the Company.

Ordinary Resolution 4 is to re-elect Ms Lim Sok Hui (Mrs Chng Sok Hui) who will cease to hold office under Article 104 of the
Constitution of the Company.

Ms Jane Diplock AO will, upon re-election, continue to serve as Chairman of the Regulatory Conflicts Committee, as well as a
member of the Audit Committee and Risk Management Committee. Ms Chew Gek Khim will, upon re-election, continue to
serve as Chairman of the Risk Management Committee and a member of the Nominating & Governance Committee. Ms Lim
Sok Hui (Mrs Chng Sok Hui) will, upon re-election, continue to serve as a member of the Risk Management Committee.
Ms Diplock and Ms Chew are considered independent directors. Ms Lim is considered a non-executive non-independent
director. Detailed information on these directors can be found under Board of Directors in the Companys Annual Report

Governance
2016. Save as disclosed therein, there are no material relationships (including immediate family relationships) between each
of these directors and the other directors or the Company.

Mr Lee Hsien Yang and Mr Chew Choon Seng are retiring from office by rotation, and have decided not to offer themselves for
re-election to office.

3 Ordinary Resolution 5 is to seek approval for (i) the payment of $750,000 to the Chairman as director's fees for undertaking
duties and responsibilities as Chairman of the Board, and (ii) the provision to him of a car with a driver, for the financial year
ending 30 June 2017 (which is the same as that approved for the preceding financial year). As in the preceding financial year,
the sum of $750,000 does not include any directors fees payable for serving as chairman or member of any Board committee(s)
or attendance fees for any Board committee meetings.
Financials
4 Ordinary Resolution 6 is to seek approval for the payment of up to $1,600,000 to all directors (other than the Chief Executive
Officer) as directors fees for the financial year ending 30 June 2017 (which is the same as that approved for the preceding
financial year). The exact amount of directors fees received by each director for the financial year ended 30 June 2016 is
disclosed in full in the Annual Report.

5 Ordinary Resolution 8 is to empower the directors to issue shares and to make or grant instruments (such as warrants or
debentures) convertible into shares, and to issue shares in pursuance of such instruments, up to a number not exceeding
50 per cent. of the total number of issued shares (excluding treasury shares) (the 50% Limit), with a sub-limit (Sub-Limit)
of 10 per cent. for issues other than on a pro rata basis to shareholders. For the purpose of determining the aggregate number
of shares that may be issued, the percentage of issued shares shall be based on the total number of issued shares (excluding
Others

treasury shares) at the time that Ordinary Resolution 8 is passed, after adjusting for (a) new shares arising from the conversion
or exercise of any convertible securities or share options or vesting of share awards which are outstanding or subsisting at the
time that Ordinary Resolution 8 is passed, and (b) any subsequent bonus issue or consolidation or subdivision of shares.

Although the Listing Manual of the SGX-ST enables the Company to seek a mandate to permit its directors to issue shares up
to the 50% Limit if made on a pro rata basis to shareholders, and up to a Sub-Limit of 20 per cent. if made other than on a
pro rata basis to shareholders, the Company is nonetheless only seeking a Sub-Limit of 10 per cent. The Company believes that
the lower limit sought for the issue of shares made other than on a pro rata basis to shareholders is adequate for the time
being and will review this limit annually.
158 Singapore Exchange

Notice of Annual General Meeting


Singapore Exchange Limited
Company Registration No. 199904940D
(Incorporated in the Republic of Singapore)

6 Ordinary Resolution 9 is to renew the mandate to allow the Company to purchase or otherwise acquire Shares, on the terms
and subject to the conditions set out in the Resolution.

The Company intends to use its internal sources of funds to finance its purchase or acquisition of its Shares. The amount of
financing required for the Company to purchase or acquire its Shares, and the impact on the Companys financial position,
cannot be ascertained as at the date of this Notice as these will depend on whether the Shares are purchased or acquired out
of capital and/or retained profits of the Company, the number of Shares purchased or acquired, the consideration paid for
such Shares and whether the Shares purchased or acquired are held as treasury shares or cancelled.

Based on the existing issued Shares (excluding treasury shares) as at 2 August 2016 (the Latest Practicable Date), and
assuming no further Shares are issued or repurchased, or held by the Company as treasury shares, on or prior to the Annual
General Meeting, the purchase by the Company of up to the maximum limit of 10 per cent. of its issued Shares (excluding
treasury shares) will result in the purchase or acquisition of 106,985,826 Shares.

In the case of market purchases by the Company, assuming that the Maximum Price is $8.03 for one Share (being the price
equivalent to 5 per cent. above the Average Closing Price of the Shares immediately preceding the Latest Practicable Date),
having regard to the Companys share capital and cash and cash equivalents of approximately $426,445,000 and $440,725,000
respectively, the maximum number of Shares the Company is able to purchase or acquire out of capital to be held as treasury
shares or to be cancelled for the duration of the proposed Share Purchase Mandate is 53,106,476 Shares representing 4.96 per cent.
of the total number of issued Shares (excluding treasury shares) as at the Latest Practicable Date.

In the case of off-market purchases by the Company, assuming that the Maximum Price is $8.41 for one Share (being the price
equivalent to 10 per cent. above the Average Closing Price of the Shares immediately preceding the Latest Practicable Date),
having regard to the Companys share capital and cash and cash equivalents of approximately $426,445,000 and $440,725,000
respectively, the maximum number of Shares the Company is able to purchase or acquire out of capital to be held as treasury
shares or to be cancelled for the duration of the proposed Share Purchase Mandate is 50,706,897 Shares representing
4.74 per cent. of the total number of issued Shares (excluding treasury shares) as at the Latest Practicable Date.

In the case of market purchases by the Company, assuming that the Maximum Price is $8.03 for one Share (being the price
equivalent to 5 per cent. above the Average Closing Price of the Shares immediately preceding the Latest Practicable Date),
having regard to the Companys retained profits and cash and cash equivalents of approximately $243,475,000 and
$440,725,000 respectively, the maximum number of Shares the Company is able to purchase or acquire out of retained
profits to be held as treasury shares or to be cancelled for the duration of the proposed Share Purchase Mandate is
30,320,672 Shares representing 2.83 per cent. of the total number of issued Shares (excluding treasury shares) as at the
Latest Practicable Date.

In the case of off-market purchases by the Company, assuming that the Maximum Price is $8.41 for one Share (being the price
equivalent to 10 per cent. above the Average Closing Price of the Shares immediately preceding the Latest Practicable Date),
having regard to the Companys retained profits and cash and cash equivalents of approximately $243,475,000 and
$440,725,000 respectively, the maximum number of Shares the Company is able to purchase or acquire out of retained
profits to be held as treasury shares or to be cancelled for the duration of the proposed Share Purchase Mandate is 28,950,654
Shares representing 2.71 per cent. of the total number of issued Shares (excluding treasury shares) as at the Latest
Practicable Date.

The financial effects of the purchase or acquisition of such Shares by the Company pursuant to the proposed Share Purchase
Mandate on the audited financial statements of the Company and the Group for the financial year ended 30 June 2016 based
on the assumptions set out above are set out in paragraph 2.7 of the Letter to Shareholders dated 30 August 2016.

7 Special Resolution 10 is to adopt a new Constitution following the wide-ranging changes to the Companies Act, Chapter 50
of Singapore (the Companies Act) introduced pursuant to the Companies (Amendment) Act 2014 (the Amendment Act).
The new Constitution will consist of the memorandum and articles of association of the Company which were in force immediately
before 3 January 2016, and incorporate amendments to (inter alia) take into account the changes to the Companies Act introduced
pursuant to the Amendment Act. Please refer to the Letter to Shareholders dated 30 August 2016 for more details.
Notice of Annual General Meeting Annual Report 2016 159

Performance Overview
NOTES

Group Overview
(1) Each of the resolutions to be put to the vote of members at the Annual General Meeting (and at any adjournment thereof) will
be voted on by way of a poll.

(2) (a) A member who is not a relevant intermediary is entitled to appoint not more than two proxies to attend, speak and vote
at the Annual General Meeting. Where such members form of proxy appoints more than one proxy, the proportion of the
shareholding concerned to be represented by each proxy shall be specified in the form of proxy.

(b) A member who is a relevant intermediary is entitled to appoint more than two proxies to attend, speak and vote at the Annual
General Meeting, but each proxy must be appointed to exercise the rights attached to a different share or shares held by such
member. Where such members form of proxy appoints more than two proxies, the number and class of shares in relation
to which each proxy has been appointed shall be specified in the form of proxy.

Value Creation & Sustainability


Relevant intermediary has the meaning ascribed to it in Section 181 of the Companies Act, Chapter 50 of Singapore.

(3) A proxy need not be a member of the Company.

(4) Completion and return of the instrument appointing a proxy or proxies by a member will not prevent him/her from attending,
speaking and voting at the Annual General Meeting if he/she so wishes. The appointment of the proxy(ies) for the Annual
General Meeting will be deemed to be revoked if the member attends the Annual General Meeting in person and in such event,
the Company reserves the right to refuse to admit any person or persons appointed under the relevant instrument appointing
a proxy or proxies to the Annual General Meeting.

Governance
(5) The instrument appointing a proxy or proxies (together with the power of attorney, if any, under which it is signed or a certified
copy thereof) must, if sent personally or by post, be deposited at the office of the Companys Share Registrar, Boardroom Corporate
& Advisory Services Pte. Ltd. at Singapore Land Tower, 50 Raffles Place #32-01, Singapore 048623 or, if submitted by electronic
communication (where the member has signed up for the electronic service provided by the Company to its members to receive
notices of meetings, annual reports and other shareholder communications electronically, for online proxy appointment and
for the access and use of an SGX-designated website (collectively Electronic Service) and where such service has been made
available), be received via the online proxy appointment process through the Electronic Service, in either case not less than
48 hours before the time appointed for holding the Annual General Meeting.

Financials
Others
160 Singapore Exchange

Notice of Annual General Meeting


Singapore Exchange Limited
Company Registration No. 199904940D
(Incorporated in the Republic of Singapore)

PERSONAL DATA PRIVACY


By submitting an instrument appointing a proxy(ies) and/or representative(s) to attend, speak and vote at the Annual General
Meeting and/or any adjournment thereof, a member of the Company (i) consents to the collection, use and disclosure of the members
personal data by the Company (or its agents or service providers) for the purpose of the processing, administration and analysis by
the Company (or its agents or service providers) of proxies and representatives appointed for the Annual General Meeting (including
any adjournment thereof) and the preparation and compilation of the attendance lists, minutes and other documents relating to the
Annual General Meeting (including any adjournment thereof), and in order for the Company (or its agents or service providers) to
comply with any applicable laws, listing rules, take-over rules, regulations and/or guidelines (collectively, the Purposes), (ii) warrants
that where the member discloses the personal data of the members proxy(ies) and/or representative(s) to the Company (or its agents
or service providers), the member has obtained the prior consent of such proxy(ies) and/or representative(s) for the collection, use
and disclosure by the Company (or its agents or service providers) of the personal data of such proxy(ies) and/or representative(s)
for the Purposes, and (iii) agrees that the member will indemnify the Company in respect of any penalties, liabilities, claims, demands,
losses and damages as a result of the members breach of warranty.

BOOKS CLOSURE DATE AND PAYMENT DATE FOR FINAL DIVIDEND


Subject to the approval of the shareholders for the Final Dividend being obtained at the Annual General Meeting, the Register of
Members and the Transfer Books of the Company will be closed from 5.00 p.m. on 30 September 2016 (Friday) up to (and including)
3 October 2016 (Monday) for the purpose of determining shareholders entitlements to the proposed Final Dividend. The Register of
Members and the Transfer Books will re-open on 4 October 2016 (Tuesday).

Duly completed transfers in respect of ordinary shares of the Company received by the Companys Share Registrar, Boardroom
Corporate & Advisory Services Pte. Ltd. at Singapore Land Tower, 50 Raffles Place #32-01, Singapore 048623 up to 5.00 p.m. on
30 September 2016 (Friday) will be registered before entitlements to the proposed Final Dividend are determined. Shareholders
whose securities accounts with The Central Depository (Pte) Limited are credited with ordinary shares of the Company as at
5.00 p.m. on 30 September 2016 (Friday) will rank for the proposed Final Dividend.

The Final Dividend, if approved by shareholders at the Annual General Meeting, will be paid on 7 October 2016 (Friday).
Singapore Exchange Limited
Company Reg. No. 199904940D

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#02-02 SGX Centre 1
Singapore 068804
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fax: +65 6535 6994

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